WASHINGTON – Under pressure to act quickly on the sagging election-year economy, Democratic and GOP leaders held talks Wednesday amid increasing optimism that the warring factions might actually agree soon on an economic stimulus bill.
House Speaker Nancy Pelosi, D-Calif., and Republican leader John Boehner of Ohio emerged from a rare meeting promising to develop legislation that would both provide a boost to the economy and pass with little controversy.
"There is an agreement that we will work together to try to put together a package that truly is stimulative, that will happen quickly, and those conversations are going to continue in coming days," Boehner said.
The promises of cooperation stood in sharp contrast to the poisonous relations between the competing parties last year, especially on the Iraq war and a children's health measure. Now, both sides believe it's imperative to address the economy, and they have no chance of success unless they work together.
Pelosi agreed the session with Boehner, Minority Leader Roy Blunt, R-Mo., and her top Democratic lieutenants was "constructive." She also held meetings with rank-and-file Democrats in which she spent considerable time tamping down expectations about what might make its way into the legislation.
"This package is not going to be all things to all people," Pelosi told reporters.
There's no shortage of ideas on how to kick-start the ailing economy, and neither side is willing to state with confidence what a final stimulus measure will look like.
There's widespread agreement, however, that tax rebates along the lines of the $300-600 checks awarded in 2001 are likely to be part of the measure.
Democrats are coalescing around ideas such as extending unemployment benefits, boosting food stamp payments and doling out aid to ailing state governments.
Republicans are promoting business tax breaks such as incentives for investments in new plants and equipment and lowering the corporate income tax rate.
They also say extending tax cuts slated to expire at the end of 2010 would give small businesses greater confidence to make investments now.
Democrats say extending the expiring Bush tax cuts — including breaks on investments and for married couples and people with children — is a nonstarter. Republicans have signaled, however, that they won't insist on extending expiring tax cuts as a precondition of GOP support for the stimulus measure.
House Ways and Means Committee Chairman Charles Rangel, D-N.Y., whose panel writes tax legislation, said that in the spirit of producing a bipartisan bill he is resigned to providing some tax breaks favored by business, despite personal reservations about their effectiveness.
Meanwhile, a House-Senate panel held the first of a spate of hearings on the economy Wednesday, where former Treasury Secretary Lawrence Summers told lawmakers that the economy has worsened to the point where Congress should pass an economic stimulus bill of up to $150 billion.
Summers, an economics professor at Harvard University and Treasury secretary in the later years of the Clinton administration, had previously said $50 billion to $75 billion in tax cuts and pump-priming government spending is needed to boost the sagging economy.
Now, his recommendation is to roughly double that — though perhaps employing a "trigger" that would release the money only if the economy worsens further.
Summers said the advantage of employing a trigger to release a second stage of fiscal stimulus that could take effect without the need for new legislation is to avoid delays that could deliver an economic boost too late.
"The risks here of 'too little, too late' are far, far, far greater than the risk of 'too much too soon,"' Summers said.
Joint Economic Committee Chairman Charles Schumer, D-N.Y., said he had spoken with Federal Reserve Board Chairman Ben Bernanke on Monday and that Bernanke is "generally supportive" of lawmakers and Bush passing a stimulus bill.
"He said that while he wasn't going to endorse a specific plan, if an economic stimulus package was properly designed and enacted so that it enters the economy quickly, it could have a very positive effect on the economy," Schumer said of Bernanke's views.
Bernanke testifies before the House Budget Committee Thursday.