Jan. 23 -- Congress, known for taking months to pass major legislation, is under pressure to enact a stimulus measure within weeks to help keep the U.S. out of recession.
The proposals under consideration -- tax rebates, incentives for business investment and increases in unemployment insurance - - won't have the desired effect if they are delayed, economists said. And if lawmakers load the package up with pet proposals or make it too much more expensive than the $150 billion figure under discussion, it might backfire by boosting inflation or the deficit, they said.
``The timing of fiscal stimulus is critical,'' Peter Orszag, head of the Congressional Budget Office, told the Senate Finance Committee yesterday. ``If the policies do not generate additional spending when the economy is in a phase of very slow growth or recession, they will provide little help to the economy when it is needed.''
``The sooner the better,'' he added.
House and Senate leaders said yesterday they intend to present the president with a bill in the next three weeks. That took on added urgency as global financial markets careened lower in recent days after a decline in U.S. home values and billions of dollars in losses at banks. The Federal Reserve moved quickly yesterday, cutting its benchmark overnight lending rate by 75 basis points to 3.5 percent after an unscheduled meeting.
Virtual Sprint
Three weeks would be a virtual sprint compared with Congress's usual pace. It took until March 2002 for an economic stimulus plan aimed at recovering from the Sept. 11, 2001, terrorist attacks to be signed into law.
Among the proposals likely to be included in the package are tax rebates of as much as $1,600, tax breaks for businesses to promote investment, an extension of unemployment insurance benefits and more money for the food stamp program.
House Speaker Nancy Pelosi of California said Democratic and Republican leaders agreed with President George W. Bush to get something done ``as soon as is legislatively possible.'' Pelosi and Senate Majority Leader Harry Reid met with Bush and their Republican counterparts at the White House yesterday.
House Minority Leader John Boehner said he and Pelosi would work out details, including whether rebates will be available to workers who pay no income tax but do have Social Security and Medicare taxes deducted from their paychecks. The White House has assigned Treasury Secretary Henry Paulson with the working out details with the House leadership.
Breakfast
Paulson, Pelosi and Boehner discussed the outlines of a plan at a breakfast meeting today, Boehner said. He said they hadn't agreed on the details and weren't sure if a deal would be reached for the president to announce in his State of the Union speech Jan. 28.
``While we want to do this quickly, we want to do it right,'' Boehner said, echoing Bush's words yesterday.
Once Bush signs a bill, it may take the Internal Revenue Service several months to begin mailing rebate checks, Orszag told the Senate Finance Committee. In 2001 it took about 10 weeks to distribute all of the checks included as part of that year's stimulus package.
``Time is of the essence,'' said Jason Furman, an economist at the Brookings Institution in Washington. ``The leaders in Congress have been talking about getting this done in 30 days. As long as you keep the bill simple and focused on short-term economic stimulus and don't get into the broader debate, that's feasible.''
Christmas Trees
That may be difficult because such bills frequently turn into what are known in Washington as legislative Christmas trees, decorated with lawmakers' pet proposals.
``Most senators are going to want to add their own little amendments to this bill,'' said Pete Davis, an economist who heads Washington-based Davis Capital Investment Ideas and once worked for the Senate Budget Committee.
Reid will ``have to make a decision on whether to play ball with Republicans to get a bill out and in doing so fight off people like Mrs. Clinton,'' Davis said, referring to New York Senator Hillary Clinton, 60, a Democratic presidential candidate.
Clinton has proposed freezing mortgage interest rates and giving $30 billion in aid to states and cities. Her rival in the campaign for the Democratic nomination, Illinois Senator Barack Obama, 46, has called for an immediate $250 tax cut for American workers, an extra $250 Social Security payment for senior citizens and $10 billion to help people facing foreclosure.
Democrats have majorities in both houses and may want the bill to contain home-heating and foreclosure assistance, among other things, Davis said. Such a bill may take much longer to pass and face a veto threat from the president.
Corporate Tax
On the Republican side, Representative Eric Cantor of Virginia reiterated his desire to see the corporate tax rate slashed to 25 percent from 35 percent.
Senator Charles Grassley, the top Republican on the tax- writing Finance Committee, said pressure for pet proposals from various interest groups is inevitable. ``It happens every tax bill,'' he said. ``We've only been in town 24 hours.''
Bush himself yesterday added a note of caution to predictions of speedy legislation. ``Legislative bodies don't move necessarily in an orderly, quick way,'' he said. ``Everybody wants to get something done quickly. We want to make sure it gets done right.''
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