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." (By Chip Somodevilla -- Getty Images)

"There are a lot of interests that have made the case for one provision or another," said Rep. Jim McCrery (La.), the top Republican on the Ways and Means Committee. The volume of requests has not yet overwhelmed him, he said, but only because "I have lots of staff."

Democratic White House hopefuls are exerting their own pressure. Former senator John Edwards (N.C.) kicked off the bidding Dec. 22 with a $25 billion proposal of clean-energy projects, unemployment insurance extensions, aid to state governments and housing assistance.

On Jan. 11, Sen. Hillary Rodham Clinton (N.Y.) upped the ante with a $70 billion stimulus plan that includes a $30 billion housing crisis fund, $25 billion in emergency energy assistance to poor families, $10 billion to extend and broaden unemployment insurance benefits, and $5 billion in energy-efficiency and alternative-energy spending. She would also impose a 90-day moratorium on subprime mortgage foreclosures and freeze interest rates on subprime mortgages.

Two days later, Sen. Barack Obama (Ill.) laid out a $75 billion plan, including $45 billion in individual $250 tax rebates and Social Security supplements that would be mailed quickly to as many as 95 percent of U.S. workers. Those rebates could be doubled if the first injection did not do the trick.

Against the wishes of many Democrats on Capitol Hill, the presidential contenders made no effort to offset the cost of their proposals with tax increases, loophole closures or spending cuts.

"I think the most crucial tests for a stimulus package meeting our fiscal responsibility principles should be, is it fast acting, does it have high bang for the buck, and is it temporary?" said Gene Sperling, a Clinton economic adviser.

The presidential candidates' proposals have put Democratic congressional leaders in a difficult position. Their final plan could bolster one candidate over another, depending on its shape. Asked whether they were being influenced by the competing plans, House Democratic leaders stood in awkward silence yesterday before Majority Leader Steny Hoyer (D-Md.) quipped, "When they become president, we'll work with them."

Rather than guiding the debate on Capitol Hill, the candidates' packages have immediately become fodder for argument. Austan Goolsbee, a University of Chicago economist and Obama economic adviser, scoffed at much of the Clinton plan, saying the complexity of the proposals would delay their impact until it is too late to make a difference. By the time poor families realized they were eligible for Clinton's $25 billion in low-income heating assistance and fill out the five-to-10-page application, winter would be over, he said.

Underscoring Clinton's contention that she has the experience to address such problems, Sperling said much of the plan grew out of lessons learned in 1993, when President Bill Clinton assembled a similar stimulus plan.

"If you're worried you didn't come up with something first, you come up with reasons to be against it," Sperling said.

Republican candidates have been far more circumspect in their proposals. Former Arkansas governor Mike Huckabee unveiled what he called a stimulus package this week, but it was short on details and shorter on price tags. He called for an immediate "second round of negotiations with subprime lenders with an eye toward" expanding borrower assistance. He pledged to increase defense funding by about $200 billion and boost spending on energy.

"We will build new planes, new armed vehicles, new robotic land and air vehicles, and new ships right here in America," he said.

More typical have been proposals from McCain, former New York mayor Rudolph W. Giuliani and former Massachusetts governor Mitt Romney, who have eschewed short-term fixes for permanent tax cuts and tax code changes that they say will boost investor confidence and bolster long-term economic growth.

"In the end, it's far better to have economy growing fast because its tax policy makes sense," said Douglas Holtz-Eakin, a former director of the Congressional Budget Office who is now McCain's top economic adviser. "His proposals would fix the underlying issues in the economy."

Asked whether McCain needed a stimulus plan for political purposes, Holtz-Eakin replied: "I have no instincts on politics at all. If there is a pandering expert out there somewhere, it's not me."