Party rifts return over economic jump-start

By Lisa Mascaro

Wednesday, Oct. 15, 2008 | 2 a.m.

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.”