Fed Chairman Backs Stimulus

A senior House Democratic leadership aide said Pelosi was willing to greet the Republican offer to drop the demand to make Bush's tax cuts permanent with a concession of her own, acceptance of a significant business tax cut to encourage investment.

And House Ways and Means Committee Chairman Charles B. Rangel (D-N.Y.) vowed to reach an agreement with congressional Republicans and Bush on economic stimulus, snubbing his presidential candidate, Hillary Rodham Clinton, in the interest of bipartisanship.

In an interview with washingtonpost.com's PostTalk, Rangel dismissed the stimulus proposals of all of the presidential candidates, suggesting in particular that Clinton could be useful in the debate only if she could influence the tax-writing Senate Finance Committee, on which she does not sit, or that committee's ranking Republican, Charles E. Grassley of Iowa. "This is a time where no one can afford to be partisan," Rangel said.

White House spokesman Tony Fratto said: "The headwinds that we're dealing with right now are things that we see over the next coming quarters. So we do want to try to pass something quickly." He added, "I see no obstacle to that. It seems to me that both sides of the aisle and both Houses of Congress want to try to get to an agreement."

Not everyone was getting along, however. During the conference call with Bush, Reid was angry when he heard that Bush was going to go public today with his stimulus proposals, demanding to know why the president was not waiting for a bipartisan plan. Others on the conference call had to calm Reid down, according to congressional sources, and Bush reassured him that he would be announcing only his "principles" for stimulus, not a plan.

"I am disappointed that [Bush] is rejecting a request from leaders of both parties and both chambers to work with us directly to develop a bipartisan package rather than unilaterally detailing his own approach without congressional input," Reid said in a written statement.

On the Republican side, Cantor disparaged Democratic proposals to extend and expand unemployment insurance, temporarily boost the federal share of Medicaid payments, and offer cash to states hit hard by the housing crisis.

"Those are enhancements of the safety net in a very uncertain time," Cantor said. "I'm not saying that's not a worthy goal, but if we are in pursuit of stimulus, this is not what we're looking for."

Staff writers Michael Abramowitz and Paul Kane contributed to this report.