Stimulus plan could be mother of all 'Christmas tree' bills

McClatchy NewspapersDecember 19, 2008 

WASHINGTON — Christmas falls on Thursday, but in the nation's capital it will come in early January, when the 111th Congress convenes and begins assembling an economic stimulus plan worth anywhere from $600 billion to $850 billion, and counting.

The House of Representatives aims to pass the package during the first week of the new year. The Senate hopes to finish it in time for newly inaugurated President Barack Obama to sign shortly after he takes office Jan. 20.

However, lawmakers first must write a bill that, in legislative terms, doesn't become the year's biggest Christmas tree, festooned with billions for pet projects and special interest ornaments that are pleasing politically but not necessarily what the economy needs right now.

One example: On Friday, The Association of Zoos and Aquariums issued a news release calling for "shovel-ready zoo and aquarium infrastructure projects to be eligible for federal stimulus funding."

"This is close to unprecedented for our lifetimes because of the amounts we're talking about here," said Norman Ornstein, a congressional scholar at the American Enterprise Institute, a conservative research center. "It's very tricky business. It's tricky because you have to get around this temptation that members (of Congress) have to see this as the never-ending Christmas tree. Or the never-ending bag of Santa's toys."

Lawmakers are preparing to tack on everything from tax credits for corporate research and development to hundreds of billions of dollars for infrastructure spending and similar help for cash-strapped states. Throw into that mix an all-star lineup of special-interest groups coming in with tin cups in hand.

The stimulus package has noble aims. Chief among them is to spark employment and consumer spending, and thus turn around a U.S. economy mired in a deep recession that's growing worse.

However, the process already is fraught with heavy lobbying and political intrigue, as interested parties — lawmakers, state and local officials and sundry lobbyists — jockey for a slice of what's sure to be the biggest pie most of them have ever seen.

The biggest push is coming from state and local governments. Most of them have to submit their budgets next month, and almost all desperately need help. According to the National Governors Association, some 20 states already have cut $7.6 billion from their fiscal 2009 budgets, and 25 states have predicted $60 billion in shortfalls for fiscal year 2010.

"An economic recovery package will go a long way in providing (money) for capital projects and spur job growth," said Joe Hackney, the president of the National Conference of State Legislatures.

Other interests also are pressing their agendas.

Unions and liberal groups have banded together as the Campaign for Jobs and Economic Recovery Now, a $4 million to $5 million campaign to urge spending on infrastructure and public works projects.

In a letter published Tuesday in several U.S. newspapers, the leaders of 31 state universities wrote that Obama should provide at least $40 billion for higher education.

America 2050, a group of state transportation and environmental officials, is lobbying for more infrastructure spending.

Although the stimulus plan remains a work in progress, there already are wide areas of agreement. State and local governments will get a broad fiscal-aid package. They're expected to receive money for Medicaid — the health-care system for the poor and people with disabilities — as well as cash to defray energy costs for low-income Americans.

Help to states for food stamps, as well as another extension of unemployment compensation, also is winning wide support.

Obama already has signaled that he hopes to use the stimulus package to expand broadband Internet service into rural areas, more fully linking America's back roads to the information superhighway. He also hopes to promote "clean energy" such as solar and wind power, using government money to create a public-private partnership that provides jobs and sparks a promising industry in its infancy.

To create urban jobs, the budding Obama stimulus plan envisions weatherization projects that make federal buildings and schools more energy efficient.

Beyond the lobbyists' potential to bid up the plan's costs, there's also the eternal conflict between the House and Senate, which could produce different approaches that merge into a compromise bigger than either one alone.

The solid Democratic majority in the House means that there will be "little daylight" between Obama's plan and what Speaker Nancy Pelosi moves. The Senate is always more complicated, however, because under its rules 60 votes are needed to cut off debate and move to a vote.

Senate Finance Committee Chairman Max Baucus, D-Mont., is working on his own tax package, and other senators also are showing greater independence from Obama. For instance, Pennsylvania Democrat Bob Casey held a news conference Thursday to press his demands for part of any stimulus package.

Taxes are sure to be a source of conflict. House Democrats and Obama's team are seriously eyeing a reduction in the payroll tax as well as new tax rebates, thinking that's the quickest way to get relief to middle- and lower-income consumers.

Baucus, however, thinks that any stimulus plan should be split evenly between taxes and spending, while other congressional leaders lean toward having twice as much spending as tax cuts.

Other Democrats are more wary, wanting more emphasis on energy tax breaks, such as extending the credit for producing electricity from wind and making it easier to connect renewable sources to the power grid.

One of the biggest elements of the stimulus plan will be spending on road and bridge repair and other infrastructure projects. Those will put people to work, but whether they'll have a ripple effect to foster a more productive, competitive economy is debatable. Japan tried to reverse a decade-long recession with infrastructure spending, but it did little to make that nation more competitive.

There's also the question of how fast infrastructure projects can get under way. To stimulate the weak economy, they need to be ready to go promptly, not awaiting planning and bureaucratic approvals.

"What they ought to do is take every step they can to provide stimulus. If you don't do something close to that, you have no control," said R. Bruce Josten, the vice president of government affairs for the U.S. Chamber of Commerce.

One way to do that, he said, is not to listen only to what governors and elected officials ask for, but to look as well at what the Federal Highway Administration suggests. The agency compiles an annual list of road projects around the nation that would reduce bottlenecks that slow commuters and truckers, dragging down productivity.

At its most basic level, Obama's massive stimulus will be designed to be economic "shock and awe." He'd rather overreach than fall short.

"The goal here is to mainline a major shot of adrenaline (into the economy) to avoid going from a much more serious recession to depression," said Ornstein of the American Enterprise Institute. "Even if you could take all the politics out of it, knowing what will actually encourage consumption, regain confidence in the lending process and work quickly — not so easy to do."

MORE FROM MCCLATCHY

To ask a question about this story or any economic question, go to McClatchy's economy Q&A

Bush on economy moves: I didn't want to be Herbert Hoover

Forget the economy: Killer asteroids could pose real danger

What's it like to be a pirate? In dirt-poor Somalia, pretty good

McClatchy Newspapers 2008

McClatchy Washington Bureau is pleased to provide this opportunity to share information, experiences and observations about what's in the news. Some of the comments may be reprinted elsewhere in the site or in the newspaper. We encourage lively, open debate on the issues of the day, and ask that you refrain from profanity, hate speech, personal comments and remarks that are off point. Thank you for taking the time to offer your thoughts.

Commenting FAQs | Terms of Service