WASHINGTON — The Democrats who control Congress will hold their first hearing Wednesday on the need for stimulus plans to spark the economy, increasingly a campaign theme of the party's presidential candidates.
The Joint Economic Committee, composed of lawmakers from both the House of Representatives and the Senate, will hear from former Clinton Treasury Secretary Lawrence Summers along with experts from liberal and conservative policy-research groups. House Democrats plan a town hall meeting later in the day to talk about spurring economic growth.
New York Sen. Hillary Clinton proposed a $70 billion stimulus plan last Friday, which Illinois Sen. Barack Obama followed Sunday with a $75 billion plan. Former North Carolina Sen. John Edwards, third in opinion polls, offered elements of an economic plan last month that his rivals' "new" stimulus plans resemble.
All three Democratic hopefuls would extend and expand unemployment insurance. They also call for stepped-up federal aid to states, which suffer from falling tax revenues when the economy slows and must raise taxes or slash spending in response because of balanced-budget rules for some. This exacerbates the slowing economy.
Before leaving on his Mideast trip, President Bush confirmed that he's looking at a stimulus plan, and his aides expect him to discuss the details during his State of the Union address Jan. 28. He's said to be leaning toward a one-time tax rebate like that Democrats propose, as well as tax incentives for businesses to spend and hire.
In a heated campaign environment, politics are seeping into economic proposals. When Clinton announced her stimulus plan last week, she called for an automatic five-year freeze on certain adjustable-rate mortgages to prevent the rates from jumping to higher, unaffordable levels. She failed to mention that this would be voluntary. Lenders had worked out a voluntary agreement late last year with Treasury Secretary Henry Paulson to freeze the mortgages of sub-prime borrowers — those with the weakest credit histories — if they hadn't yet fallen behind on payments.
Obama's plan also contains some politics. Like Clinton, he proposes tax rebates for working Americans. But he also pledges a $250 one-time boost in Social Security payments to help seniors on fixed incomes. If there were a cumulative three-month drop in employment, the plan would kick in another $250 for seniors. As spelled out on his campaign Web site, Obama's plan would provide this payment to all seniors, even those of moderate to high income who wouldn't need it.
No Democratic contender is offering spending cuts to offset the cost of his or her stimulus plan.
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