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Obstacles await Obama's stimulus effort in Congress

 

McClatchy Newspapers

WASHINGTON — President Barack Obama's economic stimulus effort faces a series of obstacles — including serious questions about its tax provisions and how quickly it might spark the economy — as Congress prepares to vote on the package.

The House of Representatives is expected to debate and vote on its $825 billion version on Wednesday or Thursday, and since Democrats have a strong majority and tight control of the rules of debate, the measure should pass easily.

However, if it gets no Republican votes — a growing possibility — the plan could trigger the kind of ugly, divisive partisan fight that Obama has been trying mightily to avoid.

The plan still is widely expected to win final congressional passage by mid-February. As it crawls through the Senate, however, it will face significant hurdles.

The Senate Finance Committee will begin considering the tax portions of the bill Tuesday, and Senate Democrats are concerned whether the House package pumps money into the economy quickly enough.

"We may have to rethink this," said Senate Budget Committee Chairman Kent Conrad, D-N.D., of the House spending proposals "We have got to focus like a laser beam on making this package timely."

Lawmakers are troubled by last week's Congressional Budget Office report, which concluded that only 7 percent of money from key spending programs in the stimulus package is likely to be used in the current fiscal year, and only 38 percent will have been used by the end of fiscal 2010.

White House Budget Director Peter Orszag disputed that. He said that 75 percent of the money would be spent by the end of fiscal 2010, but lawmakers want more details; currently they see a CBO document that foresees significant lags in almost every major area of proposed spending.

Nariman Behravesh, chief economist for forecaster IHS Global Insight in Lexington, Mass., said he saw about two-thirds of the entire House package "really stimulating the economy. The others, we worry about whether they carry the punch."

While the bill would provide $30 billion in highway funds, for instance, CBO estimates that $788 million would be spent in the current fiscal year and $3 billion next year. It said that of $14 billion for school construction, only about $6.2 billion would be spent in the next two years.

About the only areas where money would be spent quickly was in employment and training, but even there, only $2.8 billion of $4.6 billion would be spent in the first two years, according to CBO.

Senate Democrats also have concerns about whether more help for housing and financial institutions should be included. The banking industry continues to teeter, and there's a sense last year's $700 billion in aid may not be enough to solve the problem.

Conrad also liked the idea of a big tax credit for homebuyers, which "could be out quickly."

The biggest hurdle, though, could be the Republicans. Dispirited after losing the White House and seeing their congressional ranks cut in November, they've become more energized in recent days, as the House GOP crafted a detailed stimulus plan of its own.

Its centerpiece is tax cuts. The bottom rates, now 10 percent and 15 percent, would drop to 5 percent and 10 percent. That cut, Republicans estimate, could save a married couple filing jointly as much as $3,200 annually.

McClatchy Newspapers 2008
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