Democrats pushing 2nd stimulus, GOP resisting

[September 10, 2008]  WASHINGTON (AP) -- With the economy the No. 1 issue just eight weeks from Election Day, majority-party Democrats are trying to push a second stimulus package through Congress to follow the tax rebate checks sent out earlier this year.

So far, Republicans aren't joining the march, echoing the reservations expressed by presidential nominee John McCain and the White House.

Pressure is building for lawmakers to do something -- anything, perhaps.

Democratic leaders plan to forge ahead with a $50 billion stimulus package in the short time Congress will be in session between now and the election.

"It's about jobs. Jobs, jobs, jobs, jobs -- a four-letter word," House Speaker Nancy Pelosi said Tuesday, discussing possible contents of a stimulus package.

She spoke just days after the government reported that the unemployment rate bolted to 6.1 percent in August, the highest rate in five years. Economists took the jump as a recession warning.

Also, business growth is slowing, food and energy prices remain high and the housing and financial markets remain distressed.

The shape of the stimulus package is still undecided, but proposals to repair roads, extend federal unemployment benefits, increase home energy subsidies, provide disaster assistance payments and provide aid to automakers are expected to be considered.

Campaigning Monday in hard-pressed Flint, Mich., Democratic presidential nominee Barack Obama urged Congress to pass a second stimulus package "so that people would have a little more money in their pockets." He wants the package to include a tax rebate for individuals and aid to states for education, health care and other costs.

Despite the darkening economic clouds and growing Democratic passion for a new stimulus package, passage of such legislation could still be a long shot.

Time is a key factor, for one thing. As is White House opposition.

And some congressional Republicans worry that the legislation could become a vehicle for pet public-works projects that, while potentially creating jobs, could be examples of the kind of questionable government "earmark" spending that McCain has railed against.

On Tuesday, the nonpartisan Congressional Budget Office said the federal government will run a near-record deficit of $407 billion this year and that next year's deficit would reach a record $438 billion -- and could go even higher as the government takes over mortgage giants Fannie Mae and Freddie Mac.

"These budget numbers are obviously bad. The deficit will have doubled from last year," said Sen. Judd Gregg of New Hampshire, senior Republican on the Senate Budget Committee. "We've got a Democratic stimulus bill, Stimulus 2, floating around here that could be anywhere between $25 and $50 billion. We've got a Democratic national candidate for president who's proposed $300 to $350 billion of increases in spending annually."

Sen. Charles Schumer, D-N.Y., said the package could range from $50 billion to $75 billion.

There's no doubt the presidential campaigns are directly influencing the congressional debate.

"The more Democrats can be seen as taking the lead in dealing with economic problems, obviously the better off Obama's going to be," said Andrew Kohut, director of the Pew Research Center.

With polls now showing McCain and running mate Sarah Palin to have essentially drawn even with Obama and Joe Biden, "the question becomes whether people's concerns about the economy, and the way the Republicans and President Bush have handled this issue, will overcome some of the reservations they have about Obama and overcome the zing that Palin has brought to the Republican ticket," Kohut said.

Obama claims he will cut taxes for 95 percent of all working families. His middle-class tax cut would take the form of a credit of as much as $1,000 per family. He would raise taxes on households earning more than $250,000 a year, eliminate some corporate tax breaks, raise capital gains taxes and establish an extensive new government health care plan.

McCain would retain existing Bush administration tax cuts for all taxpayers while keeping capital-gains rates at their present low levels, cut corporate taxes and hold down government spending. He has sought to double the personal exemption for dependents to $7,000. And he has proposed giving individuals help in buying their own health insurance policies that they could carry from job to job.

But he has not called for a second stimulus package.

"In the first 100 days of our administration, we will look at every agency and department and expenditure of the federal government and ask this simple question: 'Is it serving the needs of the taxpayer?'" he and Palin wrote in a joint essay in Tuesday's editions of the Wall Street Journal. "If it is not, we will reform it or shut it down, and we will spend money only on what is truly in the interest of the American people."

While Obama is emphasizing the "lousy economy," McCain is trying to divert attention to "the narrative of biography and character" of himself and his running mate, said Norm Ornstein, a political analyst with the American Enterprise Institute.

In one sense, his choice of the Alaska governor could help him because "it was, in the end, a blue-collar narrative. She can resonate with those voters possibly more than he can."

[Associated Press; By TOM RAUM]

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