Congress, Obama Likely to Be at Odds on Stimulus Package

House Speaker Nancy Pelosi wants the incoming president to immediately increase taxes on the wealthiest Americans.
House Speaker Nancy Pelosi wants the incoming president to immediately increase taxes on the wealthiest Americans. (By Lauren Victoria Burke -- Associated Press)
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By Shailagh Murray and Paul Kane
Washington Post Staff Writers
Friday, January 9, 2009

After weeks of allowing President-elect Barack Obama to take the lead in outlining a massive economic stimulus package, congressional Democrats warned yesterday that the final shape of the legislation could look quite different when it returns to his desk for a signature.

Top Obama advisers left a two-hour meeting of Senate Democrats acknowledging the difficulties they face in forging consensus on the enormous package and completing action by mid-February.

Senior aide David Axelrod, who attended the session along with Lawrence H. Summers, Obama's chief White House economic adviser, said lawmakers offered "constructive comments" about specific provisions Obama has advocated, adding that he was not discouraged by the remarks.

"I'm not going to characterize it as pushback," Axelrod said. "I call it people doing their jobs."

Senate Majority Leader Harry M. Reid (D-Nev.) said Summers will return to the Senate for a rare Sunday meeting and further discussions on the bill. "He learned a lot about how we feel," Reid said after yesterday's session.

Top Democrats continued to offer their own priorities for the package. The most popular add-on, floated by several Democratic committee chairmen and backed by many Republicans, calls for additional domestic energy investment. Education tax breaks and help for homeowners facing foreclosure also appear to be gaining popularity on the Hill.

Obama floated five tax proposals this week that he hopes to include in the legislation, representing about 40 percent, or $300 billion, of the overall $775 billion estimated price tag. But the ideas have not caught on with lawmakers, at least in the form Obama has suggested. One proposal that Obama touted on the campaign trail, a $3,000 tax credit for companies to hire workers, was derided by members in both chambers and of both parties.

Even as lawmakers begin stimulus deliberations, they are increasingly concerned about the nation's overall fiscal picture, as they digest new data from the Congressional Budget Office estimating a $1.2 trillion budget deficit for the current fiscal year.

Conceding the budget's fragile state, House Speaker Nancy Pelosi (D-Calif.) urged the incoming Obama administration to stick to its campaign pledge to immediately increase taxes on the wealthiest Americans, a position that Obama has wavered on since winning election.

"Put me down as clearly as you possibly can as one who wants to have those tax cuts for the wealthiest in America repealed," she told reporters yesterday morning.

Pelosi said the income tax cuts for the highest-earning Americans -- down from 39.6 percent to 35 percent, part of the 2001 tax plan passed by President Bush -- have been "the biggest contributor to the budget deficit."

As a candidate, Obama vowed to immediately repeal the Bush tax cuts for top wage earners, while promising tax relief for the bottom 95 percent of Americans. He planned to use the money from a repeal to finance some of his ambitious agenda items.

As the economic situation grows more dire, however, Obama's advisers have hedged on the timing of a repeal. And in an interview with CNBC on Wednesday night, Obama said he had not yet decided what to do.

"I'm not prepared to make a hard and fast commitment," he said.

But despite the percolating disputes, Pelosi pledged to send completed legislation to the new president by mid-February, when Congress plans to take a 10-day break. "We are not going home without an economic recovery bill," she said.

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