Current stimulus ain't gonna pass Senate

[Surlethe]

WaPo

Senate Democratic leaders conceded yesterday that they do not have the votes to pass the stimulus bill as currently written and said that to gain bipartisan support, they will seek to cut provisions that would not provide an immediate boost to the economy.
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Senate Lacks Votes to Pass Stimulus
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Obama On Stimulus
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Bank Rescue Would Entail Triage for Troubled Assets

The legislation represents the first major test for President Obama and an expanded Democratic Congress, both of which have made economic recovery the cornerstone of their new political mandate. The stimulus package has now tripled from its post-election estimate of about $300 billion, and in recent days lawmakers in both parties have grown wary of the swelling cost.

Moderate Republicans are trying to trim the bill by as much as $200 billion, although Democrats working with those GOP senators have not agreed to a specific figure.

The Senate's first vote on a stimulus amendment, a failed effort yesterday to add more infrastructure spending to the package, signaled the change in course. For weeks, the measure has grown to meet a worsening economic crisis with the largest possible infusion of government cash. Despite warnings of dire consequences if Congress does not act boldly, Republicans have become resolute in their opposition to what they view as runaway and unnecessary spending in the legislation. And as the total in the Senate version climbs to $900 billion, unease also is stirring among moderate Democrats.
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Extensive Senate revisions would force lawmakers to work at a frantic pace to meet a self-imposed Feb. 13 deadline for completing a compromise bill with the House, which passed an $819 billion version last week. Obama reiterated his call for urgent action in a meeting Monday night with Democratic leaders and by letter yesterday to Senate Majority Leader Harry M. Reid (D-Nev.).

For now, the Senate bill remains a work in progress. "We're trying to find a way to reach 60" votes, Majority Whip Richard J. Durbin (D-Ill.), the Senate's chief vote counter, told reporters. "A number of Democrats have said they want to see changes to the bill before they can vote for it."

Durbin predicted that "100 decisions" will be "made between now and when we deliver the bill to the president's desk."

To remove obstacles from the measure's path, Reid said numerous items could fall by the wayside. "The president, the Democratic leaders, the Republican leaders certainly have every intention of moving forward to getting everything out of the bill that causes heartburn to a significant number of senators," he told reporters yesterday.

What Senate leaders cannot predict is which provisions will stay in and which will fall out. It also remains unclear whether Democrats are willing to tamper with measures that are considered high priorities for Obama, but that tackle longer-term challenges such as health-care reform and alternative energy development, rather than providing the quick jolt of expanded unemployment and food-stamp benefits and individual tax relief.

The most ambitious effort to cut the bill is being led by Sens. Ben Nelson (D-Neb.) and Susan Collins (R-Maine), moderates in their parties who share a dislike of the current version. Collins is scheduled to visit Obama at the White House this afternoon. "I'm going to go to him with a list" of suggested deletions, she said.

Nelson said he and Collins have agreed to "tens of billions" in cuts, although he said he is skeptical that the effort will reach Collins's target of $200 billion in reductions. The pair has counted up to 20 allies in their effort, with more Democrats than Republicans at this point.

Among the items that the Collins-Nelson initiative is targeting: $1.1 billion for comparative medical research, $350 million for Agriculture Department computers, $75 million to discourage smoking, $20 million in Interior Department funding, $400 million for HIV screening and $650 million for wildlife management.

The medical research measure, aimed at developing uniform treatment protocols, is an Obama priority and part of the foundation he is trying to build for health-care reform.
This Story

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Senate Lacks Votes to Pass Stimulus
*
Obama On Stimulus
*
Bank Rescue Would Entail Triage for Troubled Assets

"We have the blessing of leadership to do a good deal of this," Nelson said. But he conceded the difficulty of finding middle ground, with scores of provisions potentially up for review. "It's a little bit of a bookkeeping nightmare," he said.

Sen. Olympia J. Snowe (Maine), a moderate who has been considered the most likely GOP vote in favor of the plan, said yesterday that she cannot support it until items that would not do enough to stimulate the economy or create jobs are dropped.

"They should scrub it," said Snowe, who voted for the tax-relief portion in the Senate Finance Committee last week. She said many of the provisions were jammed into the legislation by members of the Appropriations Committee who were "trying to short-circuit the normal legislative process."
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Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, said the centrist group led by Nelson and Collins would target programs that the Congressional Budget Office has estimated would not spend their funding quickly. He said the list includes a number of proposals that will spend only about 10 percent of their funding in the next 18 months. "These become immediate candidates for review," Conrad said of the provisions.

Some Republicans in the group are seeking a much broader rewrite of the legislation, and they want Obama to lead the effort. "Get us all in a room. That's what you do with a major piece of legislation," said Sen. Lindsey O. Graham (S.C.), who supports an alternative drafted by Sen. John McCain (R-Ariz.) that would cost $445 billion.

Graham said he could back something between the McCain bill and the House bill. Although some Republicans would prefer to shelve the measure temporarily, hoping that spending demand will cool, other GOP lawmakers would prefer to stay on schedule and find common ground. "There's sort of political chaos right now," he conceded.

The momentum to cut spending became apparent in votes on several amendments. First, the Senate fell two votes shy of the 60-vote threshold needed yesterday to add $25 billion for highway projects and transit programs.

Then, on a 52 to 45 vote, the chamber stripped $246 million in tax breaks for Hollywood production companies, a measure offered by Sen. Tom Coburn (R-Okla.), the Senate's self-appointed watchdog on federal spending. Coburn, who almost always loses his quixotic efforts to cut funding, appeared jubilant -- if somewhat surprised -- by his unexpected victory.

"This is a gift," he said of the Hollywood provision. "It's not going to stimulate the economy at all."

Later, the Senate turned away legislation to reduce the tax rate on multinational corporations that are returning earnings from overseas, as opponents argued that it was a giveaway to industry. But some new spending programs proved too politically attractive to the Senate. In a 71 to 26 vote, the Senate approved a new incentive for car buyers, at an estimated cost of $11 billion over 10 years. According to Sen. Barbara A. Mikulski (D-Md.), the amendment's sponsor, buyers could deduct the cost of sales tax for new cars purchased between last Nov. 12 and Dec. 31, 2009. Individuals with incomes of up to $125,000 would qualify.

And the chamber ended the night by unanimously accepting an additional $6.5 billion for research at the National Institutes of Health, pushing the cost of the Senate legislation -- for now -- to more than $900 billion.

Why do we have to lean so far to the goddamn right? Either scrap the bill entirely or make it bigger; don't sit it right in the middle so that it bankrupts my kids and does jack shit in the short run. If we're going to tax the hell out of the future, it should at least jump-start the economy real good.

[ray245]

Told you. People keep complaining about Obama catering or giving in to the Republicans, yet without their support, the US can forget about the stimulus bill.

[The Duchess of Zeon]

And why the fuck aren't they forcing a filibuster to humiliate the Republicans as obstructionist? Jesus christ, the democrats really have all been clamping each other with a budizzo in castration parties.

[Starglider]

I mentioned Robert Reich's blog a short while back, but he had something interesting to say about the context for this (edited for length);

The Real Fight Starts After the Stimulus is Enacted

The real stimulus debate hasn't even started yet. Congress will pass President Obama's stimulus package in the next two weeks, more or less as he wants it. But when the economy starts to turn up again, perhaps as early as next year, the president will have the real tough decisions to make. He'll have to choose which spending will continue -- or whether any of it will continue at all. Sixteen years ago, Bill Clinton came to Washington with his own ambitious plans to reverse widening inequality, rebuild the nation's crumbling infrastructure, create an efficient and affordable health-care system and address the growing environmental crisis. But because of raging budget deficits and a towering national debt, he was unable to accomplish most of this.

The biggest difference between Clinton's original agenda and the public investments Obama is proposing is that Clinton came to office as the U.S. economy was emerging from a recession; Obama is facing the worst downturn since the Great Depression. Even fiscal conservatives concede that when consumers stop buying and businesses stop investing, as they are now, the government must step in as the buyer and lender of last resort. But the moment the economy appears to be on the mend, conservatives such as Feldstein will want the government to cut spending.

Those who support the stimulus as a desperate measure to arrest the downward plunge in the business cycle might be called cyclists. Others, including me, see the stimulus as the first step toward addressing deep structural flaws in the economy. We are the structuralists. These two camps are united behind the current stimulus, but may not be for long. Cyclists blame the current crisis on a speculative bubble that threw the economy's self-regulating mechanisms out of whack. They say that we can avoid future downturns if the Fed pops bubbles earlier by raising interest rates when speculation heats up.

Structuralists see it very differently. The bursting of the housing bubble caused the current crisis, but the underlying problem began much earlier -- in the late 1970s, when median U.S. incomes began to stall. Because wages got hit then by the double-whammy of global competition and new technologies, the typical American family was able to maintain its living standard only if women went into the workforce in larger numbers, and later, only if everyone worked longer hours. When even these coping mechanisms were exhausted, families went into debt -- a strategy that was viable as long as home values continued to rise. But when the housing bubble burst, families were no longer able to easily refinance and take out home-equity loans. The result: Americans no longer have the money to keep consuming. When you consider that consumers make up 70 percent of the economy, the magnitude of the problem becomes apparent.

What happened to the money? According to researchers Thomas Piketty and Emmanuel Saez, since the late 1970s, a greater and greater share of national income has gone to people at the top of the earnings ladder. As late as 1976, the richest 1 percent of the country took home about 9 percent of the total national income. By 2006, they were pocketing more than 20 percent. But the rich don't spend as much of their income as the middle class and the poor do -- after all, being rich means that you already have most of what you need. That's why the concentration of income at the top can lead to a big shortfall in overall demand and send the economy into a tailspin. (It's not coincidental that 1928 was the last time that the top 1 percent took home more than 20 percent of the nation's income.)

Meanwhile, our broken health-care system drains more of our dollars yet delivers less care. When President Clinton tried to tackle health care in 1994, it represented 14 percent of our GDP, and 38 million Americans were uninsured. Now, the nation spends 16 percent of its GDP on health, and about 44 million of us are uninsured. Most cyclists acknowledge these problems, but they tend to think of them as separate from the current crisis -- issues to be tackled after the economy has recovered, and then only to the extent that we can afford to do so.

But structuralists like myself don't believe that the economy can fully recover unless these underlying problems are addressed. Without policies that put the nation on the path to higher median incomes, higher productivity, renewable energy and a more accessible and efficient health-care system, we'll face deeper and more prolonged recessions, followed by ever more anemic upturns. As early as next year, the business cycle may hit bottom and begin climbing. At that point, cyclists and structuralists will want two different things -- and which side the president chooses will be, as Will Marshall of the Progressive Policy Institute puts it, the "central drama" of the Obama administration. The president recently sought to placate the cyclists by promising to focus on controlling the future costs of Social Security and Medicare. Perhaps Obama has in mind a "grand bargain" that would allow him to continue his structural agenda after the business cycle turns upward in return for limiting spending for those two giant entitlement programs.

Let's hope he has something more in mind, something more fundamental: a debate about public investment and sustainable growth. For structuralists, the size of the federal debt itself is irrelevant. Debt has to be considered in proportion to the economy as a whole. According to government projections, the national debt will exceed half the nation's gross domestic product by the end of this year -- not including the stimulus package. That's certainly high, but not close to a record. The debt was far more than 100 percent of GDP at the end of World War II. That mammoth debt, not incidentally, put Americans back to work, financed industrial production, underwrote a new generation of science and technology and created a wave of demand for consumer goods when the war ended. In short, it got the economy on a new and faster track, thereby allowing the United States to pay down the debt and ushering the country into a new era of widely shared prosperity.

He will need to open the larger debate sooner rather than later. This downturn is revealing the U.S. economy's underlying flaws. Once the business cycle turns up, the public and its representatives may be less inclined to tackle the things that truly drag us down. Clinton was, after all, reelected in 1996 on the wave of a cyclical upturn in the economy. But the structural problems that he failed to address -- widening inequality, sagging median incomes, a broken health-care system, crumbling infrastructure and global warming -- are that much larger now, making the current crisis all the worse.

I'm not familiar enough with US politics to be able to say how accurate that is, but it certainly sounds sensible to me.

[Crayz9000]

It should have been obvious for a while now to anyone with at least two functional brain cells to click together that the US economy is seriously broken, and no, it's not just a passing hangover but rather an underlying cancer.

Basically, the US needs chemotherapy, and it needs it NOW. After the worst is over, it needs to spend a few years in the rehabilitating itself, not just to be shoved back out the door and onto the street, so to speak.

[Patrick Degan]

Reich's analysis is essentially correct: unless the healthcare system is stabilised and broadened to the point that it can supplement private and corporate healthcare programmes in a shared-load arrangement, income growth made more generalised, and serious repair efforts upon the power grid, highway system, dams, bridges, rail network and other physical support structures of the U.S. industrial complex undertaken, any "remedies" which cyclists would favour amount to nothing more than a band-aid on a gunshot wound. The wealth-gap alone represents an increasing danger to the economic and political stability of the U.S. democratic system; in fact is a formula for eventual plutocracy and massive impoverishment which in extremis must result in revolution or collapse, or bring about the more likely result of complete stagnation. Under none of these eventualities will the U.S. be able to retain either it's democracy or it's superpower status; a fact which cyclists and especially stupid conservatives fail to grasp.