White House Makes Economic Case for Stimulus-Sized Deal, Dems Slam Price Tag

Seemingly overnight, Congress has another stimulus package on its hands. And this time Democrats, for the most part, are the ones fighting it.

The package announced Monday of tax cuts and unemployment aid and breaks for businesses is probably worth north of $800 billion over two years, though Obama administration officials at this point are not putting a price tag on it. That's just about the value of the spend-heavy stimulus bill from 2009 -- the one Republicans assailed for putting too much money on the line for too little gain.

The latest proposal, negotiated with congressional Republicans, leans more on tax breaks. But Obama faces a heavy lift with his party in convincing skeptical lawmakers, just days after his deficit commission warned of a fiscal calamity on the horizon, that another giant hole blown in the federal budget will pay off in terms of economic growth.

The president is getting an early boost from economists who say the package will fuel post-recession growth. On Wednesday, he cited their predictions that the package could lead to higher job growth over the next two years, urging lawmakers to "get this done."

Moody's celeb Mark Zandi said this week that the deal should help propel 2011 GDP growth to 4 percent -- that's up from 2.7 percent. He also predicted the unemployment rate would fall to 8.5 percent by the end of next year.

But to some lawmakers, the price outweighs the potential benefit. After all, the bulk of the package is devoted to keeping tax rates the way they are, as opposed to implementing new rates and policies. And the benefits included for wealthy taxpayers are drawing the most ire in the Democratic caucus.

"I feel like we are suffering from the worst possible case of collective short-term memory loss," Sen. Mark Udall, D-N.M., said in a written statement, noting the warnings of the president's debt commission. While saying Congress needs to extend the Bush tax cuts for the middle class, he said tax cuts for the wealthy would not be effective.

House Democrats, coming out of a meeting on Capitol Hill Tuesday night, said they were concerned that the compromise package would lower the estate tax to 35 percent -- it was scheduled to rise to 55 percent after having been 0 percent this year.

In an interview with Fox News, Rep. Charlie Rangel cited the sheer size of the package.

"We're talking about the actual loss of revenue," he said Wednesday, defending his concerns about tax breaks for the wealthy. "We're talking dollars and cents."

Though Senate Republican Leader Mitch McConnell said Tuesday the vast majority of his caucus would be supporting the deal, cracks were showing in some corners of the conservative wing.

Sen. Jim DeMint, R-S.C., in an interview on Hugh Hewitt's radio show, complained that the package would increase the deficit, specifically directing his concerns at $56 billion worth of proposed long-term unemployment aid. He suggested turning that into a loan.

At the same time, DeMint said the bill still taxes too much by raising the death tax at all and not making other tax rates permanent. "We don't need a temporary economy," he said.

The conservative Club for Growth made a similar argument, saying the bill should drop its spending measures for the sake of the deficit but make the tax relief permanent.

The proposed compromise would extend the Bush tax rates for all Americans for two years. It would extend long-term unemployment aid for one year, while also providing working Americans a temporary reduction in their Social Security payroll tax.

It would extend a handful of tax breaks from the original stimulus bill, as well as allow businesses to expense all their investments in 2011. The Obama administration says the business provision alone could drive more than $50 billion in additional investment next year.

Without calling it a stimulus, the White House continues to make an aggressive case for how the package will help rebuild the economy. President Obama practically lectured Democrats for being too "sanctimonious" during an afternoon press briefing Tuesday.

"There is a sense of urgency here," White House senior adviser David Axelrod told Fox News. He said the typical family faces a $3,000 annual tax increase without this deal.

"We want to get something done," he said Wednesday, warning that the economy could "fall backward" if the compromise fails.