Las Vegas Sun

March 28, 2024

ECONOMY:

Reid and company propose a new deal

Public works project reminiscent of FDR’s would boost construction, jobs

In his autobiography, and often in speeches, Senate Majority Leader Harry Reid talks about how growing up, the closest he ever got to religion was the portrait of President Franklin D. Roosevelt hanging on the wall of his parents’ small house.

As Wall Street recoils this week from the worst financial crisis since the Great Depression and Congress looks for ways to respond, Reid is turning to a Roosevelt-like step to help get the country back on track.

Reid and congressional Democrats are reviving calls for a vast government construction program that could provide an antidote to the rising unemployment and shrinking private-sector investment in the national economy.

In Nevada, where joblessness is greater than it was following the 9/11 attacks and the mortgage mess and its ensuing credit crunch are flat-lining homebuilding as well as some construction on the Las Vegas Strip, an influx of cash could prime the pump, as economists say, for growth.

“People are asking: What should we do?” Reid said Thursday. “We should have an economic recovery program. Let’s do something about infrastructure — highways, roads, bridges, dams, waterways, sewer systems.”

Economists say this is not quite the Great Depression, despite the stomach-churning gymnastics on the stock market this week and Treasury Secretary Henry Paulson’s breathtaking decision to shore up one industry giant with an $85 billion infusion of taxpayer cash, only to let another fade into bankruptcy.

Reid and his counterpart in the House, Speaker Nancy Pelosi, have not had the same ability to persuade Congress, and the White House, to approve such grand aid for Main Street.

The centerpiece of their first economic stimulus package, this spring, was taxpayer rebate checks; only later did Congress pass increased unemployment benefits and mortgage relief. But broader plans for an estimated $50 billion to the states for construction projects and other aid were left on the table.

Opposition comes from Republicans, as well as some conservative Democrats, who are reluctant to see the government meddle in the market. Republicans, in particular, see infrastructure spending as a handout to the trade unions, which tend to politically support Democrats. Republicans also say they worry about adding to the deficit, which has soared to unprecedented heights under the Bush administration, which inherited a balanced budget.

Still, economists believe the problems unfolding this week on Wall Street are likely to cause further heartache on Main Street. A boost from the feds could help, many say.

“The worse the financial problems are, the more of a drag they will impose, and the stronger the case for economic stimulus,” said Doug Elmendorf, an economist at the Brookings Institution.

Stephen Miller, chairman of the Economics Department at UNLV, could see no apparent downside to rolling out a stimulus plan — unless it comes too late, after the economy has rebounded.

With just one week left before lawmakers adjourn to campaign for the fall elections, Congress is not likely to have time to craft and pass a spending package. However, both Reid and Pelosi suggested Thursday they would be willing to call lawmakers back to Washington to move a bill.

Pelosi has tapped three House committee chairmen to begin investigating what went wrong on Wall Street as the next Congress turns its attention to beefing up regulation of the mortgage and finance industries.

“Let’s face it,” Pelosi said shortly before sending President Bush a letter Thursday outlining elements of a new stimulus package. “We can only have a stimulus package if the president is willing to sign one.

“Up until now, the president has not been persuaded,” she said. “Maybe the events of the last week, and especially the last few days, will be more eloquent to him than anything we have been able to say.”

Lisa Mascaro can be reached at (202) 662-7436 or at [email protected].

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