Tentative Deal Reached on Stimulus Plan

The New York Times reports:

House leaders and the White House on Thursday announced a tentative agreement on an economic stimulus package of roughly $150 billion that would pay stipends of $300 to $1,200 per family, and more for families with children, plus provide tax incentives for businesses to encourage spending.

The accord was announced by Speaker Nancy Pelosi of California, the Republican leader, Representative John A. Boehner of Ohio, and Treasury Secretary Henry M. Paulson Jr. at a Capitol news conference and hailed minutes afterward by President Bush as the fruit of “patience, determination and good will” in both parties.

The president and the speaker both described the accord as embracing the basic precepts of their respective parties. Mr. Bush called it “a powerful and effective way to help taxpayers and businesses” by letting people keep and spend more of their own money.

Ms. Pelosi said the package is aimed at the middle class “and to those who aspire to be in the middle class.” She described it as “timely, targeted and temporary — that was our standard.”

In addition to the tax rebates, or stipends, Ms. Pelosi said the package would offer some quick relief for those homeowners in danger of losing their houses.

Mr. Boehner called the package “simple, clean and neat.” Like Ms. Pelosi, he said none of the parties to the talks got everything they wanted. But in the end, he said, “This agreement is a big win for the American people.”

President Bush said the agreement was also a victory for the kind of bipartisanship that some politicians and analysts say is in short supply in Washington of late. And as he has many times, the president said the American economy is “structurally sound” despite rising energy prices and problems in the housing industry.

Democrats released a summary estimating that the rebates would go to 117 million families. About two-thirds of the total package would go toward the rebates, with the remaining one-third going toward business tax breaks, like write-offs for equipment purchases.

Both leaders pledged quick action in the House, and both pointedly urged similar alacrity by the Senate, whose members operate “with their very senatorial rules,” as Ms. Pelosi put it.

“Speed is of the essence,” Mr. Paulson said.

President Bush underscored that message, as he offered warm praise for the negotiators in both parties. He also took the opportunity to urge once again the extension of tax cuts that were approved by the Republican-controlled Congress early in the decade and are to expire within a few years.

Senator Harry Reid of Nevada, the Democratic majority leader, said minutes after the announcement that he was pleased an agreement had been reached, and that he wanted a package ready for Mr. Bush by the time Congress recesses around President’s Day. But he said senators would “work to improve the House package” through the addition of unemployment benefits and other items.

Late in the negotiations that preceded Thursday’s breakthrough, Ms. Pelosi agreed not to include two proposals that had broad support among Congressional Democrats: an extension of unemployment benefits and a temporary increase in food stamps.

In exchange for those concessions, the Bush administration and House Republicans agreed that the stipend of at least $300 would be paid to all workers who earned at least $3,000 last year, even those who did not earn enough to pay taxes.

As it was presented on Thursday afternoon, the package calls for workers who paid income taxes to receive $300 to $600, and couples to receive up to $1,200 — plus $300 more for each child. The stipend, which some lawmakers were calling a “tax rebate,” would be subject to income limits so that the wealthiest taxpayers would not receive it. Payments would go to individuals earning up to $75,000 and couples earning up to $150,000. He said roughly two-thirds of the overall package would be aimed at individual taxpayers and one-third at businesses.

Senators Reid and Mitch McConnell of Kentucky, the Republican minority leader, have yet to give their approval to the accord. But, while there may be some wrinkles to iron out between the House and Senate, there was nothing to suggest any disagreement so severe as to be a potential deal breaker.

Republicans immediately cheered the deal as “tilted toward taxpayers” and avoiding “extraneous spending” on unemployment benefits, food stamps, or infrastructure projects, which some Democrats had said should be included in a stimulus package.

But it was unclear how the package, without extended unemployment benefits or increased food stamps, would be received by Democrats in the Senate, including Senator Edward M. Kennedy of Massachusetts and Senator Charles E. Schumer of New York, who have said that those proposals offered the best prospects for quickly injecting added spending into the economy.

Senator Max Baucus, the Montana Democrat who is chairman of the Finance Committee, reiterated his interest in extending unemployment benefits at a hearing on Thursday morning, where he said his committee would mark up a fiscal stimulus bill next week.

“There are reports that a deal may be close on the House side,” Mr. Baucus said. “The Senate will want to speak, as well.”

That announcement of potential action by the Finance Committee could jar Democratic leaders who have been striving for a carefully coordinated effort on the economy. Earlier this week, Mr. Reid announced that the House would take the lead in developing the stimulus package and would conduct the immediate negotiations with the White House and Congressional Republicans.

Noting that tax rebates were one potentially cost-effective method to spur new spending, Mr. Baucus said: “Another example would be expanding unemployment insurance benefits. In recent recessions, Congress has extended the number of weeks that unemployed workers could receive benefits. We could do that again. We could provide a further extension for recipients in high unemployment states. And we could also temporarily increase the dollar amount of benefits to help unemployed workers to pay their bills.”

“Unfortunately, under current law, fewer than 4 in 10 unemployed workers receive unemployment insurance benefits,” Mr. Baucus continued. “To address this problem, we could extend eligibility. For example, we could extend benefits to part-time workers.”

Mr. Schumer, at the same hearing, also lamented Ms. Pelosi’s concession on unemployment benefits, but said he hoped that cooperation on a quick stimulus plan would continue. “While I may not agree with every element of the package — such as the decision to leave out extended unemployment benefits, which economists say would give us the greatest bang for the buck — there are some very positive developments around the tax rebate for families,” he said. “I encourage everyone to keep working in a bipartisan way.”

Ms. Pelosi met three times on Wednesday with Treasury Secretary Paulson and Mr. Boehner, who have served as chief architects of the plan in a rare show of bipartisanship.

On her way into a meeting Wednesday evening, Ms. Pelosi signaled that a deal might be close when she said there had been “tremendous” progress during the day.

Democratic leaders said that to speed the economic rescue package they would mostly bypass the usual committee process. Lawmakers said that they hoped the plan could be approved by mid-February and that it would be sufficient to soften an economic downturn and forestall a recession.

“One of the principal tenets of the administration and of ourselves is we have got to do this fast,” Representative Steny H. Hoyer of Maryland, the majority leader, said Wednesday. “To go through the regular process and have hearings and have mark-ups and subcommittee mark-ups, obviously we would be to some degree twiddling our thumbs while the economy burns.”

The progress toward a stimulus plan came as the Congressional Budget Office revised its economic projections to give a gloomier assessment of the economy, including a widening budget deficit and the first decline in corporate tax revenue since 2003.

The grimmer outlook prompted Senator Kent Conrad of North Dakota, chairman of the Budget Committee, to declare that a short-term stimulus package was insufficient.

“In addition to developing a bipartisan stimulus package,” Mr. Conrad said, “we also must work together to tackle the long-term fiscal challenges we face with the coming retirement of the baby boom generation. The American people rightly expect that we will come together to address these two significant challenges.”

House conservatives raised alarms about the emerging economic legislation, saying they feared it would focus too much on tax rebates and not enough on tax incentives to encourage businesses to create jobs.

They said any package should include provisions that would reduce the corporate tax rate, adjust capital gains for inflation and lower the capital gains rate for corporations.

“Giving temporary tax rebate checks to families, as important as that is, is not the same as economic growth,” said Representative Jeb Hensarling of Texas, chairman of the Republican Study Committee. “If you’re going to have an economic stimulus package, it ought to contain some economic stimulus.”

House Falling Short on SCHIP Override

The Washington Post reports:

House Speaker Nancy Pelosi (D-Calif.) reversed her stance from a week earlier, appearing resigned Sunday that Democrats would not convince enough Republicans to pass an expansion of a children's health insurance program over President Bush's veto.

"Isn't that sad for America's children?" she asked on ABC's "This Week." Her second appearance on a Sunday talk show in as many weeks came days before the House is expected to vote again on the State Children's Health Insurance Program.

Last week, Pelosi was far more optimistic about the chances of overriding Bush's veto, saying on "Fox News Sunday" that the Democrats needed "about 14 Republican votes" to reach the required two-thirds majority.

This week, it was Pelosi's Republican counterpart, House Minority Leader John Boehner (Ohio), who was facing questions on Fox, and he said he was confident that "we will have the votes to sustain the president's veto."

The White House has signaled it wants to find a compromise with Democrats over the program, but any agreement seemed distant today.

Pelosi said she has never heard from Bush about the program and she reiterated a point she made last week, that she is unwilling to support legislation that would cover fewer children than the current bill's 10 million.

The Senate already has a sufficient majority to override the veto, and Senate Minority Leader Mitch McConnell (R-Ky.) predicted on ABC that the White House and congressional Democrats would strike a deal.

"Neither side is going to leave these kids uninsured. It's become kind of a political football, which is really unfortunate. But the coverage is going to be provided in some way," McConnell said.

John Boehner on Bush's War: "If There Is No Improvement In A Few Months, Maybe Then We'll Ask Bush About A Plan B"

The Washington Times reports:
The House Republican leader said Sunday that GOP support could waver if President Bush's Iraq war policy does not succeed by the fall.

House Minority Leader John Boehner, R-Ohio, said Bush's troop increase deserves a chance and should be funded even if benchmarks for success are not met. Last week, Bush vetoed a $124 billion bill to pay for Iraq and Afghanistan operations in part because it required troops to begin returning home by Oct. 1.

A senior House Democrat said it would be ``ridiculous'' not to condition war money on progress in Iraq. Bush and his supporters say a fixed date is unworkable.

``We don't even have all of the 30,000 additional troops in Iraq yet, so we're supporting the president. We want this plan to have a chance of succeeding,'' Boehner said.

``Over the course of the next three to four months, we'll have some idea how well the plan's working. Early signs are indicating there is clearly some success on a number of fronts,'' he said.

But, he added, ``By the time we get to September or October, members are going to want to know how well this is working, and if it isn't, what's Plan B.''

Thus far, Republicans have stood behind the president's increasingly unpopular war policies, including the troop increase and an open-ended war commitment.

Yet Boehner's comments were an acknowledgment of the concern expressed by some lawmakers in private that their support could further damage the party, which lost control of Congress in the November elections.

The senior Republican on the Senate Foreign Relations committee, Sen. Richard Lugar of Indiana, said Boehner is correct.

``General Petraeus will be back. He'll make a report,'' Lugar said of Gen. David Petraeus, commander of U.S. forces in Iraq. ``Some things will go well. Some things will not go so well, but we'll still have an obligation.''

The new Democratic leadership is pushing to begin pulling troops out of Iraq.

``It would be ridiculous to think that we're going to just drop this fight,'' said Democratic Rep. Charles Rangel of New York, chairman of the tax-writing House Ways and Means Committee. ``This is not our fight. This is the American people's fight. They asked us to send a message to the president.''

``We've got to shake that White House until the people of the United States are heard,'' Rangel said. ``Sure, we've got to have some restrictions on the money.''

Connecticut Sen. Chris Dodd, a Democratic presidential candidate, said congressional Republicans increasingly seem uneasy about Bush's policies.

``So we may disagree politically here, but remember where the American public is on this issue: They want a change. They think we're getting less secure, far more vulnerable today, than ever before, and they want a change in this policy,'' he said.

Sen. Charles Schumer, D-N.Y., predicted, ``the taste for continuing with the present course among Republicans in the Senate and the House is going to fade very quickly, and we will get the change in mission.''

In a statement, House Democratic Caucus Chairman Rahm Emanuel of Illinois said Boehner's concern ``has less to do with the troops coming home, and has everything to do with his fear that House Republicans will be sent home.''

Top White House aides are negotiating with Democratic leaders on a new war spending bill.

Another Democratic presidential candidate, former Sen. John Edwards of North Carolina, argued against negotiating and said lawmakers should keep sending Bush the same Iraq spending bill.

``I think that America has asked the Democratic leadership in the Congress to stand firm, and that's exactly what I'm saying they should do,'' he said.

Edwards started airing a television commercial last week urging Congress to stand up to Bush and keep sending back the vetoed bill, which sparked a quarrel with Dodd.

``With all due respect, we could have used John's vote here in the Senate on these issues here,'' Dodd said.

Dodd and Boehner appeared on ``Fox News Sunday,'' while Edwards was on ``This Week'' on ABC. Rangel spoke on ``Face the Nation'' on CBS while Lugar and Schumer were on ``Late Edition'' on CNN.