Stimulus Gut Check: Will Voters Buy It?

Washington's great debate over the economy comes down to this in the Senate on Monday: Republicans who control 41 percent of the seats say a Democratic stimulus bill that is 44 percent tax breaks and backed by business isn't bipartisan enough.

Or consider the Senate Appropriations Committee, which has just allowed two of its Republican members to carve $83 billion out of Democratic spending recommendations but is still being accused of a $150 million "honey bee insurance" provision that never existed.

What's really going on here?

This much seems certain. The economy is in huge trouble, as shown by daily reports of troubled banks and Friday's Labor Department report of 598,000 job losses in January. President Barack Obama wants to try the new-old idea of increasing government spending, not just tax cuts, to spur demand and fight deflation. At some risk, he is rushing the legislative process before his approach is fully understood by nervous voters at home.

Obama will have another chance to explain himself with his first White House news conference Monday; Treasury's plan for dealing with housing and the banking crisis should follow Tuesday.

But thus far the debate most resembles those Western movies, where desperate men - good or bad - take aim at the horses or pack mules because they can't shoot the rider.

The president, until recently, has stayed above the fray - while the ill-fated Appropriations committees, asked to carry the load, are going down legs kicking, alternately condemned for being too piggish or too small-bore in their thinking.

Their greatest sin is being born after the New Deal, when government has changed so much in the 75 years since. Back in 1933, Interior Secretary Harold Ickes took a $3.3 billion appropriation - $424 billion in modern dollars - and carved his place in history by leading the Public Works Administration to improve the "national estate." That amount is roughly equivalent to the $466 billion remaining in new spending in the Senate bill, but to speed its distribution, the money will largely go out through existing programs - most of which didn't exist in Ickes' time.

For this the authors are condemned by Washington intellectuals - left and right - hungry for more novelty in their lives and government. In fact, one of the new ideas in the bill - federal funding for public school construction - was singled out by Republicans for elimination in the Senate talks last week. And the whole process underscores the immense disconnect between often elite economists and the general public at this time of crisis.

Former Treasury Secretary Henry Paulson, who crafted the $700 billion bank rescue fund last fall, was famously attuned to the financial markets but tone deaf to the anxieties of the political market in Congress. The economic recovery bill suffers from the same type of disconnect, as seen in the behind-the-scenes negotiations leading to the Senate compromise.

Science had little to do with Friday's outcome. Instead, the whole process became more of a political gut check of what could be sold to American voters as "stimulative" spending. To the administration's regret, the image of individual spending items and cost took precedence over job creation.

Sen. Ben Nelson (D-Neb.), one of the lead negotiators, dismissed a long list of Appropriations proposals, even when it was shown they spent out faster and at a higher multiplier rate for the economy than did some of the infrastructure projects he favored. School construction funds became almost an ideological target for Sens. Arlen Specter (R-Pa.) and Susan Collins (R-Maine), who questioned the wisdom of Washington expanding its role in what has been a state and local issue.

Health spending is a case where Republicans went different ways. Specter salvaged $10 billion for the National Institutes of Health, promising it would yield tens of thousands of new jobs. At the same time, Collins was pressing succesfully to cut out $5.8 billion for disease prevention on the grounds that it didn't belong in a stimulus bill.

Friday began with Republican moderates asking for about $87 billion in cuts. Majority Leader Harry Reid (D-Nev.) responded with an $88 billion package but relying on $18 billion of this to come from revisions in tax breaks. Collins and Specter then asked for $22 billion more in cuts and got $20 billion, sealing the deal.

The administration argues that voters understand the president's message better than Washington does - and that's where the real disconnect lies.

Obama's plan does well with about 65 percent of the public, one official said, and voters are supportive of prudent long-term investments and less insistent than Republicans that all the money spends out fast. There has been some slippage under GOP attacks but the White House is very confident that the president still has the public with him—if not Washington.

“It’s not the first time that this echo chamber has been different than the country at large,” said a second administration official.

Former Obama campaign workers held "house" meetings this past weekend to activate support. Transportation Secretary Ray LaHood told CNN's "State of the Union" that he has invited all his state counterparts to Washington on Wednesday for a mass meeting on what the highway and transit funds in the bill can mean to them - and to jobs at home.

"We're going to lay out for them," said the former Illinois Republican congressman, "what we believe are the opportunities for every state in the country to put people back to work on projects that are ready to go, by the book, no shortcuts."

Nonetheless, without the Nelson-Collins sounding board, there may be no bill at all. Both, like Specter, are members of the much criticized Appropriations panel, which makes their role in cutting the bill all the more remarkable.

"Our country cannot wait another day for another approach," Nelson said in announcing his support.

Even with the deal, Monday night's vote on cloture will be close. Sen. Olympia Snowe (R-Maine) has publicly added her endorsement, meaning three Republican votes appear solid. But Obama's old rival, Sen. John McCain (R-Ariz.) remains harshly dismissive of the White House.

"That's not bipartisanship. That's just picking off a couple of senators," McCain said Sunday on CBS News' "Face the Nation." "This is a setback. This is a setback for all Americans."

The fact that administration allies are running radio ads in Maine and Pennsylvania to keep the threesome together is a sign of how fragile everything remains.

In his own tour of the Sunday shows, Lawrence Summers, Obama's economic adviser, said he had already been to more Republican caucuses in the Capitol than he had in all his years with the Clinton administration's Treasury Department.

"The president's walked a long mile," Summers said, not hiding the stakes.

"We're in a very serious situation," he told ABC News' "This Week." "This is worse than any time since the Second World War. It's worse than, I think, most economists like me ever thought we would see."
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