Unity fades as Congress feuds over fixing economy

Washington

When the nation's security is on the line, even the most partisan of lawmakers knows to give the commander in chief the benefit of the doubt - at least at the beginning of a war.

That's why Congress rallied quickly around proposals to give President Bush authority to use force against those responsible for the Sept. 11 attacks and to provide $55 billion in emergency spending.

But fixing a slumping economy is another matter altogether. Despite new reports that the economy is sinking into recession - including expected high job-loss figures to be announced today - lawmakers are digging in for what is becoming a protracted and deeply partisan battle.

"As people put aside their partisan differences on the war, [the differences] become more pronounced on the domestic side," says Marshall Wittmann, a congressional analyst with the Hudson Institute.

At stake in this debate are two sharply different visions of how an economy rebounds. Republicans say that the key to recovery is helping businesses and corporations invest, while Democrats insist that the real need is helping consumers, especially the poorest, spend. There's overlap, but not much.

If a compromise is to be achieved before Thanksgiving, Mr. Bush will have to take a stronger hand in negotiating it, say lawmakers on both sides of the aisle.

"The president is really the repository of bipartisanship right now. He's the one at 90 percent approval [ratings].... If a stimulus package is going to pass, he has got to make it clear to the House Republicans that they are not going to get what they want," says Larry Sabato, a political scientist at the University of Virginia in Charlottesville.

But aides say Bush doesn't plan for the White House to get directly involved in negotiations - although he has asked for a stimulus package to be on his desk before the end of the month.

Last month, GOP leaders set off a firestorm in committee and on the House floor by pushing through a plan that gave billions in rebates to corporations like IBM ($1.4 billion) and General Electric ($671 million). The bill includes $21 billion in tax breaks for companies that invest abroad.

"Maybe it might help in this debate if, instead of calling them businesses or corporations, we would call them job-creating machines," said Rep. Bill Thomas (R) of California, who led the drive to pass a $100 billion economic stimulus plan in the House. In this plan, "60 cents out of every dollar goes to help the job-creating machine," he added. The bill cleared the House on a close, party-line vote (216-to-214) last week.

Senate Democrats weren't convinced by the change in vocabulary. They dubbed the plan a giveaway to core Republican campaign contributors and set about drafting their own proposal.

In the past, Senate moderates have managed to forge a consensus on tax and budget issues. Last spring, the chairman and the ranking member of the Finance Committee drafted their own version of a tax-cut bill - despite opposition from leadership in their own parties - and managed to get it through the Senate.

But agreement on a similar compromise this week has been elusive. With 60 votes needed to break a filibuster in the Senate, such a compromise is crucial.

Both parties agree that a new round of tax rebates should go to low-income workers. There's also growing interest in a plan sponsored by Senate moderates to reimburse states for a sales-tax holiday.

The biggest point of dispute is over how to help laid-off workers. The $70 billion Democratic plan set out this week by Senate Finance Committee chairman Max Baucus (D) of Montana features $33 billion in help for the unemployed, including extended unemployment insurance and health coverage. Republicans say such a proposal creates a permanent new federal benefit and forces states to pay for jobless claims they may not be able to afford.

"States not as directly affected by [the attacks of] Sept. 11 should not be forced to pay extra unemployment benefits," says Sen. Charles Grassley (R) of Iowa, ranking member of the Finance Committee. Senator Grassley won support in the Republican caucus for a $89 billion stimulus plan that includes $48 billion in tax breaks for business and $27 billion in accelerated tax cuts for higher-income tax payers.

Meanwhile, lobbyists on both sides of this issue are out in force - the first big lobby effort on Capitol Hill since Sept. 11. Citizen and labor groups launched a $300,000 ad campaign this week to defeat the GOP stimulus plans, which they describe as "profiteering." At the same time, business groups are stepping up the pressure on wavering lawmakers.

"Business waited our turn during the last tax cut," says economist Stephen Moore, president of the Club for Growth, a conservative political-action committee. "I'm for a big stimulus plan with a permanent uplifting effect on the economy. Bigger is better when it comes to a stimulus plan, and I would like to see it emphasize tax cuts."

The Senate is likely to take up the Democratic stimulus plan as early as next Tuesday.