WASHINGTON – Liberal-leaning economists made the case for several new and expensive spending programs as a House of Representatives panel on Friday pressed the Democratic case for legislation to try again to jump-start the sagging economy.
Even though Congress is in recess, Democrats have held several hearings this week to make the case for a $150 billion or more economic stimulus measure to follow the $700 billion bank rescue passed three weeks ago. A round of tax rebates and business tax breaks passed in February was credited with giving the economy a modest boost over the summer, but fears of a protracted recession after the credit crisis have Democrats promising more.
While tax cuts for low- and middle-income people are likely to be part of the Democratic plan, Democrats are focusing renewed attention on spending programs like public works projects such as road building and bridge repair, extending unemployment benefits for the long-term jobless, higher food stamp payments and aid to states to prevent layoffs and help with Medicaid costs.
"It is urgent that we prepare now to take the next steps to rescue the economy by creating jobs, providing immediate relief to the states and small businesses, and by making real investments in energy, technology and education," House Education and Labor Committee Chairman George Miller, a Democrat, said at Friday's session.
Some economists contend that federal dollars devoted to items like unemployment benefits and food stamps are more efficient tools to boost the economy than tax cuts and they say money devoted to infrastructure projects has lasting economic benefits.
"Since unemployed persons typically spend their checks to meet basic needs, the program yields a particularly large 'bang for the buck,"' said Jared Bernstein, senior economist for the liberal Economic Policy Institute.
But the Bush White House and congressional Republicans have a much dimmer view of spending as a stimulus. They blocked such spending plans earlier this year and again in September, but Democrats hope their resistance will soften as the economy continues to struggle. Senate Republicans blocked a $56 billion stimulus plan last month.
There is little evidence of changing attitudes among Republicans, however, though the results of next month's elections could change Republican attitudes.
They have outlined an economic stimulus package that will cost more than $300 billion without providing the long term stability or job creation that our economy so desperately needs, said top panel Republican Howard "Buck" McKeon of California in a statement.
If Republicans continue to resist, said Rep. Barney Frank, Democrats are likely to rejoin the issue in January, when they expect party standard bearer Barack Obama to take the oath of office as president.
"There's no question the House will pass ... a much bigger (stimulus plan) than we passed before," Frank said of a postelection session. "If enough Republicans in the Senate decide to filibuster it ... then we'll just wait until January."
Frank added that he believes the Democratic plan would offer permanent tax relief to middle income and working class people.