House Dems Plan to Draw Up Economic Recovery Plan

House Democrats plan to formulate an economic recovery plan by the time the new Congress convenes in January, a package that will focus on providing a quick stimulus while reducing long-term budget imbalances, party leaders said Monday.

About 130 House Democrats took steps toward piecing that legislation together Monday, beginning a two-day closed-door session to hear mostly Democratic-leaning experts describe the state of the economy. Judging from participants' comments during a break, the meeting was also about bashing President Bush's economic policies.

"The economy has not worked," incoming House Minority Leader Nancy Pelosi, D-Calif., told reporters. "Every family in America knows that. It finally has dawned on the president of the United States."

With the economy still showing only faint signs of life, the Democratic gathering came as Bush named John W. Snow, chairman of the railroad conglomerate CSX Corp., to replace fired Treasury Secretary Paul O'Neill and take the helm of the White House economic team.

It also came a month after elections that saw Republicans capture Senate control and slightly strengthen their control of the House. Many Democrats have complained that their party lacked a coherent economic theme during the campaign.

Congressional aides and lobbyists said Monday that Bush is considering an economic growth plan costing about $300 billion over 10 years.

Bill Dudley of the Goldman Sachs investment firm, one economist who addressed the Democrats, said afterward that he suggested a $50 billion to $100 billion package for next year that would be temporary, plus steps to buttress the budget over the longer-term. After four years of surpluses, the budget suffered a $159 billion deficit last year, and many analysts think years of $200 billion shortfalls lie ahead.

Rep. Bob Menendez, D-N.J., another leader, said the Democratic agenda would include "economic growth, job creation and tax relief for middle-class Americans."

Besides deciding how to communicate their message, Democrats must choose what their policies will be. In the last few years, rather than flatly opposing GOP tax-cutting proposals, most Democrats have voiced support for smaller tax reductions more targeted on lower- and middle-income workers.

Among the questions Democrats must decide are whether to advocate blocking parts of Bush's $1.35 trillion, 10-year tax cut from phasing in.

Only a few Democrats have proposed preventing those tax reductions from taking effect, with many others reluctant to do so for fear of being accused of favoring higher taxes. That tax package became law last year over the objections of most congressional Democrats.

"I certainly think it's on the table," Rep. Steny Hoyer of Maryland, who will be the No. 2 House Democrat, told reporters about blocking parts of the tax cut.

Other Democratic options include:

--A payroll tax holiday. A temporary halt in such taxes would help even the lowest-income earners, whose Social Security and Medicare taxes are deducted from their paychecks. But unless the government recoups the money, the proposal would weaken the two programs' solvency.

--Cuts in taxes stockholders pay on dividends. That would disproportionately help higher-income people who tend to own stocks.