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Conflicting Interests Present Hurdles to Stimulus Package

Speaker Nancy Pelosi (D-Calif.) leads the way to a news conference with fellow House leaders, from left, James Clyburn (D-S.C.), Roy Blunt (R-Mo.), Steny Hoyer (D-Md.) and John Boehner (R-Ohio). Pelosi promised a plan within two weeks but said, "It is not going to be a panacea."
Speaker Nancy Pelosi (D-Calif.) leads the way to a news conference with fellow House leaders, from left, James Clyburn (D-S.C.), Roy Blunt (R-Mo.), Steny Hoyer (D-Md.) and John Boehner (R-Ohio). Pelosi promised a plan within two weeks but said, "It is not going to be a panacea." (By Chip Somodevilla -- Getty Images)

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By Jonathan Weisman and Jeffrey H. Birnbaum
Washington Post Staff Writers
Thursday, January 17, 2008

A rush by President Bush and Democratic leaders to assemble an economic stimulus package to stave off a recession is being complicated by a potentially debilitating brew of presidential politics, ideological differences and special interest lobbying.

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Already, a bidding war among the top three Democratic candidates is complicating congressional efforts to produce a package that would not worsen the budget deficit. Republican contenders and GOP leaders are warning the White House not to compromise too much with Democrats on an economic stimulus they are not even sure is warranted.

Meanwhile, lobbying groups for industries as varied as high technology and hotels are clogging the reception rooms and e-mail inboxes of senior lawmakers, pressuring them to include the groups' favorite benefits in a stimulus package. Small businesses are seeking to write off new equipment faster. Large businesses are appealing for lower tax rates. And home builders are pleading to offset their taxable income in years past with the losses they are suffering today.

"This package is not going to be all things to all people," House Speaker Nancy Pelosi (D-Calif.) said yesterday, firing a warning shot to Republicans and Democrats alike while promising a proposal within two weeks. "It is not going to be a panacea."

The debate has highlighted the gulf separating the Democratic and Republican parties on economic policy, even as K Street stokes the engine on what House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.) fears could be a runaway train. Democrats from Capitol Hill to the campaign trail are ready to spend as much as $100 billion in the coming months on tax rebates, housing assistance, unemployment benefit extensions and aid to cash-strapped states to counter a recession that they worry may already have begun.

"The discussion of economic stimulus is no longer an academic exercise," Sen. Charles E. Schumer (D-N.Y.), chairman of the Joint Economic Committee, said at hearings yesterday. "In fact, real economic stimulus measures, enacted quickly, could be the last thing between us and a deep or protracted recession."

Republicans are not so sure. Sen. John McCain (Ariz.), at a Republican presidential debate last week, objected to recession talk, saying the economy is merely entering a rough patch. House Republican conservatives yesterday outlined a wish list that was sharply at odds with that of the Democrats: a steep cut in the corporate income tax rate, big tax breaks for business investment and a more generous tax write-off for business losses.

Most Republican presidential candidates are far more amenable to long-term changes in the tax code and spending that would address underlying drags on the economy rather than short-term, one-time fixes. And GOP leaders in Congress are concerned that Democrats would try to offset the cost of any stimulus package with future tax increases or loophole closures.

"It is incumbent upon Congress not to make matters worse by raising taxes on anyone, in any way," House Republican leaders said Tuesday in a letter to their Democratic counterparts.

But Kevin A. Hassett, an American Enterprise Institute economist advising McCain, said he is resigned to a compromise between Bush and Democratic leaders that conservatives are bound to dislike.

On K Street, the lobbying community sees potentially lucrative possibilities in an election year that otherwise might produce little legislation. Some requests are relatively modest: The National Federation of Independent Business is calling for Congress to make it easier for home-based businesses to write off their offices. But most are substantial: The R&D Credit Coalition is seeking an extension of a multibillion-dollar tax break for corporate research. And the Travel Industry Association wants Congress to cough up tens of millions of dollars to help fund advertising abroad to lure foreign tourists and create jobs at restaurants and hotels.

At the tax-writing Senate Finance Committee, one staffer has been charged with trying to keep track of the lobbyist appeals. So far, the list exceeds two dozen significant ideas, and it grows daily. The proposed beneficiaries, besides taxpayers, include real estate agents, physicians, automakers, pension funds, manufacturers, pipelines, insurers, and corporations small and large.


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