Congressional Democrats Say Economy Will Be First Priority

House Majority Leader Steny Hoyer said some things must wait.
House Majority Leader Steny Hoyer said some things must wait. (Steny H. Hoyer)
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By Paul Kane and Lori Montgomery
Washington Post Staff Writers
Sunday, November 9, 2008

Democratic leaders in Congress plan to delay consideration of a number of expensive campaign promises, including proposals to reform the nation's health-care system and fund a strategy to reduce U.S. dependence on foreign oil, instead placing top priority on attempts to spark the staggering economy.

After moving quickly with an economic stimulus plan that includes cutting middle-class taxes, Democrats said they will open the 111th Congress with less ambitious agenda items that have been blocked repeatedly by the Bush administration, such as lifting a ban on federal funding for stem cell research.

"Obviously, we're not going to do health care in the first month or two," House Majority Leader Steny H. Hoyer (D-Md.) said Friday.

Hoyer also cited energy independence and an overhaul of the federal No Child Left Behind legislation as issues that would have to wait until later in the year, if not the next, as leaders seek to build broad consensus on the more controversial issues.

Instead, House Speaker Nancy Pelosi (Calif.) intends to chart a course that will first deal with smaller pieces of legislation that already enjoy some bipartisan support and should be able to pass quickly.

"Some will be discrete pieces. Some will be comprehensive. The comprehensive pieces will take longer," Pelosi told reporters last week.

These "discrete" items should allow Democrats to record some early victories as they prepare for the bigger battles ahead, and they hope a constructive relationship with an Obama administration -- one leaders say was made stronger with the appointment of Rep. Rahm Emanuel (D-Ill.) as White House chief of staff -- will make their task easier.

In particular, increased funding for the State Children's Health Insurance Program has been a favored cause for Emanuel, who spoke with Hoyer and other congressional leaders late in the week about their agenda for next year. Bush vetoed a proposed $35 billion expansion of that program.

Democrats view increased funding for embryonic stem cell research, which had 63 votes in the Senate last year, as another issue they should be able to pass quickly. They also hope to pass most of the appropriations bills that fund the federal government before an early March deadline.

While these issues might not excite the party's core supporters, Pelosi, Hoyer and Emanuel are hoping to avoid the mistakes of the Clinton White House, aides said.

Sen. Edward M. Kennedy (D-Mass.), who hopes to return to Congress in January after undergoing brain surgery in June, has been laying the groundwork for comprehensive national health-care legislation. Kennedy plans an exhaustive round of hearings and legislative markups to ensure that the process for moving the bill will be in stark contrast to the secretive task force that helped cast suspicion on the failed health-care legislation pushed early in the Clinton administration.

But Democrats in Congress are not unanimously supportive of some of the big-ticket agenda items. Many fiscal conservatives in the party are concerned about how such large undertakings would be paid for, given the record $455 billion deficit for the fiscal year that ended in September. A variety of independent experts say the deficit this year could easily hit $1 trillion, which, at 7 percent of the gross domestic product, would be the largest one-year shortfall since 1946.

Hoyer warned that the historic nature of the election did not mean Democrats could overreach.

"It was a very substantial election. But we need to understand what that mandate was. That mandate was for change, not left or right, but change to policies that are clearly more effective," said Hoyer, who has advocated for conservative Democrats worried about the cost of government spending.

There is, however, broad consensus for additional spending to create jobs and ease the most painful effects of a recession, even if it makes the fiscal situation worse. Some economists are urging Congress to spend at least $150 billion and as much as $500 billion on temporary measures aimed at stimulating economic activity.

Pelosi has already been in talks with the Bush administration about a $100 billion package that would be followed by a larger package in January.

Democrats want to increase spending on roads, bridges and other public works projects, which they say would quickly create jobs or prevent layoffs in the nation's construction trades. Democrats also want to invest in "green infrastructure" -- such as public transportation, renewable energy sources and the retrofitting of public buildings to consume less energy -- to both stimulate job growth and reduce future dependence on foreign oil.

Republicans have dismissed the proposals as big-government initiatives that would do little for the economy. "Families and small businesses are hurting, and we need to be careful not to adopt policies that will only deepen their pain. The American people believe cutting taxes for families and small businesses is more likely to 'stimulate' the economy than increasing government spending on programs," House Minority Leader John A. Boehner (R-Ohio) said in a statement released Friday.

If Bush declines to endorse a stimulus package before he leaves office, Democrats would add expanded unemployment benefits and additional funding for food stamps to the January effort once Obama is sworn in as president.

Some form of middle-class tax relief will be included in that legislation. Key lawmakers are pushing for implementation of Obama's tax agenda, which includes new tax breaks for workers, students, parents, homeowners and the elderly that would be designed to provide rebates to families who do not owe income taxes, as well as tax reductions for those who do.

Obama has also proposed to extend the Bush tax cuts past their 2010 expiration date for families earning less than $250,000 a year.

House Democrats also plan to move rapidly to restructure regulation of the financial system. Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, said he plans to look for ways to regulate activities -- such as the rampant securitization of debt that caused the unraveling of the world's banking system -- rather than institutions. He will also reexamine mortgage-finance giants Fannie Mae and Freddie Mac, saying "the private-public entanglement, I think, will be undone."

But the most immediate task, Frank said, will be reviving a measure to ban predatory lending. "The first regulatory thing you're going to see is finally putting the stake through the heart of bad subprime loans," he said.

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