THE ECONOMY :

Party rifts return over economic jump-start

Dems want domestic spending package; GOP support far from a lock

Wed, Oct 15, 2008 (2 a.m.)

Washington — With rising joblessness and households teetering on the edge of the financial abyss, Congress is seriously considering another economic stimulus to jump-start the economy and get money flowing to folks who need it most.

Democrats are talking about a jobs-rich program of road building and infrastructure projects to put people back to work, and possibly a round of rebate checks like those sent to taxpayers this year.

Republicans are pushing for tax cuts that would make it easier to invest in stocks and real estate or maintain a small business.

Don’t expect this rescue plan to easily receive the bipartisan support that coalesced on the Hill to pass the unusual $700 billion Wall Street bailout — or the stimulus measure in February.

When it comes to determining the best way to put money in your pocket, the parties split along one of the great philosophical divides in American politics, whether to follow the party of Franklin D. Roosevelt or of Ronald Reagan.

In times like these, Democrats think government needs to spend money to make money. Republicans trust that tax cuts will entice investments that will trickle down to help those in need.

Professor Richard Sylla, an economic historian at New York University’s Stern School of Business, said it’s no surprise that as Congress weighs a new stimulus package that could be voted on after the November election, the party lines are quickly drawn.

“It’s only natural that Democrats would be talking about spending programs or tax breaks for poor people, and the Republicans would like any sort of tax cuts,” Sylla said.

Except there may be one arena for compromise: Senate Majority Leader Harry Reid’s narrowly divided Senate.

If Democrats have any hope of passing a stimulus package this fall, they will need to win the support of Senate Republicans, who killed a stimulus package this month.

This afternoon in Las Vegas, Reid will announce his proposed economic stimulus package, which will be taken up when Congress resumes Nov. 17. The package will include tax cuts to spur job growth, foreclosure relief, provisions to help the credit markets and other elements.

“We need a second economic stimulus package,” Reid spokesman Jon Summers said. “We need to do something that actually helps people. We’ve talked about the need for an economic stimulus package before. Now we’re talking about how we actually get there.”

Late last month, the House, with some Republican support, passed a $62 billion stimulus package that included spending on road and energy infrastructure, extended food stamps and unemployment benefits, and enhanced state funding for Medicaid.

The House package won support from Nevada Republican Reps. Jon Porter and Dean Heller, who are both in reelection battles. They were among 41 Republicans who crossed party lines to vote for the bill. Democratic Rep. Shelley Berkley also voted yes.

But the package arrived with a thud in the Senate, where it was easily defeated in a party-line vote. Nevada Republican Sen. John Ensign voted no. President Bush vowed to veto.

Reid’s office could not put a price tag on his new bill. Speaker Nancy Pelosi says the House version will likely be larger than the $62 billion measure, mentioning as much as $150 billion. (Her staff rejected reports Tuesday that it could be double that.)

But Republicans in the House have been dismissing the Democratic plan as an “irresponsible stimulus scheme.” In the Senate, Ensign would likely need to see tax relief to support any such measure — if he could support it at all.

“Generally, we need to keep taxes low so we do not discourage small businesses from hiring, growing and investing,” Ensign’s spokesman said.

Porter and Heller did not respond to inquiries about how they viewed a potential new package, nor did Heller’s opponent this fall, Jill Derby.

But the campaign of Porter’s challenger, state Sen. Dina Titus, said she would be primarily supportive of infrastructure spending to put Southern Nevada’s out-of-work construction workers back on the job, as well as extended unemployment benefits for the state’s jobless.

“We think a stimulus package is needed,” Titus spokesman Andrew Stoddard said. “There’s been a lot of money given to Wall Street and it’s time to turn the attention to Main Street.”

It’s unclear now, three weeks from the election, whether returning lawmakers would be more or less inclined to make a deal. Theories go both ways.

Democrats at the moment are winning economic arguments in the polls, as voters tell pollsters they trust the party more to handle such issues. Presidential hopeful Barack Obama has outpaced Republican John McCain as economic worries worsen.

Rea Hederman, a tax policy analyst at the conservative Heritage Foundation, tries to explain the two parties’ approach this way: “Democrats want to give a man a fish for the day, Republicans want to teach a man how to fish.”

He acknowledges it’s a hard sell when an out-of-work employee asks why cutting corporate taxes is a better deal than a new jobs program.

HThen he sighed. “Answering that question is always the toughest part.”

Discussion: 6 comments so far…

By texexnv

10/15/08 at 9:06 a.m.

Suggest removal

The number I heard was closer to $300 BILLION for the Pelosi/Reid package, all added to the Federal debt. Which is on top of the $1.8 TRILLION they just passed weeks ago, also just added to the Federal debt.

Now...my heart goes out to Titus' unemployed construction workers/voters that are building those mega-billion gambling houses nobody wants to come to anyway; it really does.

But I fail to see how strapping my grandchildren - and yours - with $2 TRILLION to pay off to keep a few construction workers busy until they are again laid off is harldly worth it.

And I do recognize that Boss Reid will get a lot of OUR money back in campaign contributions. But by 2010 we're going to be right back where we are today because of this reckless spending and the Boss' feckless charging everything off the the Federal debt.
By KDR81

10/15/08 at 9:14 a.m.

Suggest removal

It is a tough question to answer, but here is the answer.

A Government Job program creates a job to do X. Lets say build a road.

The road was determined to be important by the government and its utility to society is unknown until completion.

Cutting corporate taxes allows corporationso to expand investments and create jobs. Jobs will be created where the utility to society is greatest. Meaning, where people want to voluntarily spend their money.

In order to prove that the Government job creation project is better than cutting corporate taxes you have to prove that given the choice, people would have rather spent their money on building a road than buying other things to improve their lives.
By KDR81

10/15/08 at 9:15 a.m.

Suggest removal

Oh and, government job creation programs create jobs in sector Y, by taking money out of the economy that would be creating jobs in sector Z.

Jobs Y come at the expense of jobs Z.

Job Y are government fan favorites.

Job Z are consumer favorites, ie the jobs that are created by consumer spending preferences.
By Johnathan_Abbinett

10/15/08 at 11:54 a.m.

Suggest removal

"The Republicans want to teach us how to fish?"

The GOP brand has lost all credability with most of America - Republicans are no longer in a position to teach anything to anyone - except, perhaps, how sore of losers they are going to be in a couple of weeks?

We've listened to 40 years of Republican myths and lies since Nixon in '68 and the Ronald Reagan fantasy of "trickle-down economics" and "just say no" has proven to be a nightmare!

So, the delusional Repulicans need to cross the bridge of denial and join the rest of us in the real world - or, be left behind in a political desert for 40 years!
By KDR81

10/15/08 at 3:31 p.m.

Suggest removal

Economic what start?

John, read a real economics book. Start with Economics in One Lesson.

That alone should tell you that Republicans have been selling the same snake oil as Democrats.
By texexnv

10/15/08 at 3:53 p.m.

Suggest removal

The Dummocrats just weeks ago had the lifetime opportunity to easily demonstrate the differences in their economic philospoy and that of the Repugs in a monumental statement of fiscal responsibility and the most basic credo that tax money goes to where it does the most good for the most people.

And when it was all said and done, they were begging to line up behind the worst Prezz in history - especially Boss Reid.

For all intents and purposes there is no difference between the two parties in fiscal irreponsibility since then. With the market down another 700 points today, the financial world is stating how bad a decision it was to follow such an ill-conceived, rushed plan to waste $1.8 TRILLION the U.S. didn't have.