Senate to demand big changes in stimulus bill

Monday, February 2, 2009


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(02-02) 04:00 PST Washington --

The nearly $900 billion economic stimulus package that the Senate will debate this week faces a treacherous path as lawmakers of both parties warned that big changes will be needed - including dumping controversial spending items - to avoid a humiliating defeat of President Obama's first major legislative initiative.

All sides agree the anemic U.S. economy needs a jolt, and senators appear intent on reaching a deal to get a bill passed quickly. But even Democrats are now criticizing some of the proposed spending. Key Republican moderates, whose votes could decide the bill's fate, suggest they won't back it in its current form.

"Unfortunately, this bill has become a Christmas tree where members are hanging their favorite program on it," Sen. Susan Collins, one of two Maine Republican senators whose votes are being actively sought by Obama, said Sunday.

Sen. Ben Nelson, a conservative Democrat from Nebraska, said he's urging his party's leaders to strip out any elements that won't create jobs.

"There's an awful lot of spending in it that I think is questionable, marginally supportive and stimulative for jobs," Nelson said. He pointed to two spending items as examples - $1.1 billion for "comparative effectiveness research" to test the efficacy of medical treatments, and $75 million for anti-smoking programs - both items that supporters say could lower health care costs.

"Now, those are important programs, there's no doubt about it," Nelson said. "But they ought to be part of something else, not part of a jobs stimulus bill."

Common ground

Lawmakers appearing on the Sunday news shows also pointed to areas of common ground that could pave the way for a deal. Sen. Dianne Feinstein, D-Calif., is working on an amendment that would boost spending on infrastructure, which is popular with both parties. Democrats also said they are open to Republican proposals that address the housing crisis, such as a $15,000 tax credit for new home purchases.

The importance of the package was underscored by last week's report that U.S. gross domestic product shrank 3.8 percent in the last quarter of 2008, the worst showing since 1982. At least 2.6 million jobs were lost last year, and economists predict things will get worse over the new few months as consumers slash spending, manufacturers cut production and companies shed more employees.

Mark Zandi, an economist at Moody's who advised GOP presidential nominee John McCain last year and has helped shape the Democrats' stimulus plan, warned that passage of the bill was critical to halting the tide of bad news.

"If we don't pass it quickly, then the economic benefit will be significantly reduced because it's really about confidence," Zandi said. "If we dillydally and if we debate in the Congress and we don't get this done, confidence won't be restored."

But the bill is now caught up in a political tug-of-war. During last week's vote in the House, no Republicans backed the $819 billion stimulus plan, despite Obama's personal sales pitch on Capitol Hill for the bill.

Republicans are accusing Democrats of using the package to try achieve long-held liberal policy goals, such as expanding federal spending on education and health care. Democrats, in turn, argue that Republicans are refusing to abide by voters' demands for change when they elected Obama and expanded Democratic majorities in Congress.

But some Democrats now concede they made a tactical error by including spending that provided an easy target for critics, such as $50 million to help struggling nonprofit arts groups or $335 million for prevention of sexually transmitted diseases.

"Whether it is the National Endowment of the Arts or some of the STD funding or contraceptive funding, all we did was just tee up ammunition for the other side to tear this thing down," Sen. Claire McCaskill, D-Mo., a close Obama ally, told Huffington Post last week. "And I would like to think we are smarter than that."

But Republicans risk overplaying their hand, too. Obama remains enormously popular, especially after his outreach to Republicans, and GOP lawmakers could be seen as obstructionists if they block the bill rather than amend it.

Democratic pollster Stan Greenberg conducted a national survey last week that found the stimulus plan backed by 62 percent and opposed by 28 percent of respondents. He said the package was even more popular in the 13 states that will have competitive Senate races in 2010, supported by 64 percent to 26 percent.

Sen. Chuck Schumer, D-N.Y., said GOP senators won't have the same luxury as House Republicans, who could vote against the bill knowing it would pass anyway. If Senate Republicans defeat the bill, and the Dow tumbles as a result, they risk being blamed by voters.

"I think we will get enough Republicans to pass this," Schumer said. "The more the better, but I will say this: I'd rather have a really good bill that helps our economy get out of this mess with 65 votes, than dilute the bill and get 80 votes."

Democrats don't need many votes to pass the bill: With the party's majority now at 58 seats - and likely 59 once the results in the Minnesota Senate race are confirmed - they only need a couple to reach the 60-vote hurdle to avoid a filibuster.

Conservative pressure

Senate Republicans are under intense pressure by conservative activists to oppose the bill as a stand against bigger government. Radio talk show host Rush Limbaugh said GOP lawmakers have a choice to be "statesmen or reckless hacks."

However, Senate Republicans are being cautious, opposing the current bill but leaving open the chance for a deal. Senate Minority Leader Mitch McConnell, R-Ky., said he doubts the bill has the votes to pass right now, but he added it could be approved if Obama persuades Democrats to make major changes.

"I think we can come together on a bipartisan basis. ... Virtually everybody agrees we ought to do something," he said. "Let's do it timely, temporary, and targeted. Go right at the problem and do it on an overwhelming bipartisan basis."

Collins and Nelson made their remarks Sunday on CNN's "State of the Union," Zandi spoke on NBC's "Meet the Press," and Schumer and McConnell appeared on CBS' "Face the Nation."

E-mail Zachary Coile at zcoile@sfchronicle.com.

This article appeared on page A - 1 of the San Francisco Chronicle

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