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Democratic Candidates, Congressional Leaders Differ on Economy

Nancy Pelosi hosts a meeting with Treasury Secretary Henry Paulson, second from left, and Republican and Democratic leaders to discuss the economy. (AP).

By Peter Baker
The Democratic Party's leading candidates for president last night piled on President Bush for offering an economic stimulus package that is "too little, too late," as Sen. Hillary Rodham Clinton put it. But this afternoon, the Democratic Party's leaders in Congress will sit down with Bush at the White House to work out a deal to stimulate the economy, having praised the president's handling of the issue.

The divide between Democrats who are trying to win a nomination and Democrats who are trying to govern has never been clearer. As the primary season heats up and Congress returns to start its legislative year, the two factions of the party face starkly different imperatives. Clinton (N.Y.) and her rivals, Sen. Barack Obama (Ill.) and former senator John Edwards (N.C.), score political points with their liberal base by bashing Bush. But House Speaker Nancy Pelosi (Calif.) and Senate Majority Leader Harry M. Reid (Nev.) face a responsibility to lead the country in tandem with the Republican president and, if they can, head off a recession.

The internal schism among Democrats has been increasing since last week when it became clear that Bush, Pelosi and Reid actually want to work together for a change. It would be easy for either side to simply pound away on the issue, hold out for ideologically pure plans and blame the other side for the economic downturn after failing to pass a rescue package. But Bush, Pelosi and Reid all appear to have calculated that their interests lie in bipartisan accord. Both sides have essentially dropped ideas that they know would be deal-killers with the other side -- Bush agreed not to link a stimulus package to his hopes of making his first-term tax cuts permanent while Democrats appear to be staying away from large-scale public works projects as part of a final plan. And both sides have gone out of their way to welcome the other's willingness to work together.

In fact, administration and congressional aides spent much of the long holiday weekend on the phone trying to figure out how to craft a specific plan after Bush outlined his broad principles for a roughly $145 billion stimulus package on Friday. White House and Democratic aides said yesterday that the spirit of compromise was still strong and predicted they would be able to reach a deal by the end of this week. Pelosi and Reid, along with their Republican counterparts, are scheduled to meet with Bush at the White House this afternoon amid more bad economic news from around the globe. Aides hope that session will help propel an agreement.

But accord was not in the air last night in South Carolina as Clinton, Obama and Edwards debated on CNN before the Congressional Black Caucus. The economy was the first question right at the start and Clinton immediately went after Bush's announcement Friday, focusing particularly on his formulation that any tax rebates should go to those who pay income taxes.

"Everything we know about President Bush's plans would leave 50 million to 70 million Americans out because a lot of our seniors on fixed incomes don't pay income taxes," Clinton said. "But that doesn't mean they're immune from the energy costs and the health-care costs and everything else that's going up around them. And we have a huge number of working people who thankfully don't pay income tax. They pay payroll tax. They pay a lot of other taxes. President Bush's plan would do nothing to help them."

Edwards chimed in a few minutes later. "What Bush does is he leaves [out] 50 million -- as Hillary pointed out -- 50 million Americans," he said. "They're low-income Americans and moderate-income Americans. They're completely left out of the stimulus package."

Clinton then added: "The president's proposed stimulus package is not adequate. It is too little too late and it doesn't give money to the people who are hardest hit by the increased costs in energy and everything else."

The candidates correctly pointed out that about 50 million Americans work but earn little enough that they do not pay income taxes, although they do pay Social Security and Medicare taxes. The plan Bush's aides have discussed with Congress would give rebates of as much as $800 to individual taxpayers and $1,600 to married couples; by targeting those who pay income taxes, Bush's proposal would seem to leave out those 50 million from any tax break as part of the stimulus package.

But he has not dug his heels in on that and the issue is not viewed as an insurmountable problem by the Democrats on Capitol Hill, who are confident they and the White House can work out a reasonable compromise. In fact, some administration officials say privately that they expect Bush to agree to something that would benefit those who do not pay income taxes as well. After all, that's what happened in 2001, when Bush and Congress last enacted a tax rebate to spur the economy, a plan that extended the rebate to the working poor by increasing the earned income tax credit.

The disparate views on Capitol Hill and on the campaign trail underscore the dynamic likely to play out for this entire election year, making clear how difficult it will be to get things done amid the cacophony of a presidential race.

If nothing else, for the moment, the economic stimulus package is stimulating the presidential campaign.

Posted at 7:20 AM ET on Jan 22, 2008  | Category:  Morning Cheat Sheet
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Comments

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I have a new solution for the economy that no one is even talking about. It would fix so many things and boost the economy.

Here it is written by a better writer than myself...

An Open Letter to the President, Congress, Governors, and State Legislatures

We, the undersigned, call your attention to the attached report by Professor Jeffrey A. Miron, The Budgetary Implications of Marijuana Prohibition. The report shows that marijuana legalization -- replacing prohibition with a system of taxation and regulation -- would save $7.7 billion per year in state and federal expenditures on prohibition enforcement and produce tax revenues of at least $2.4 billion annually if marijuana were taxed like most consumer goods. If, however, marijuana were taxed similarly to alcohol or tobacco, it might generate as much as $6.2 billion annually.

The fact that marijuana prohibition has these budgetary impacts does not by itself mean prohibition is bad policy. Existing evidence, however, suggests prohibition has minimal benefits and may itself cause substantial harm.

We therefore urge the country to commence an open and honest debate about marijuana prohibition. We believe such a debate will favor a regime in which marijuana is legal but taxed and regulated like other goods. At a minimum, this debate will force advocates of current policy to show that prohibition has benefits sufficient to justify the cost to taxpayers, foregone tax revenues, and numerous ancillary consequences that result from marijuana prohibition.

If someone could just discuss this issue and bring it up in this economic situation in a debate I would love to hear what the candidates have to say and how they would justify continuing the war on drugs.

If you would like to read more about this and the economists that agree with this above statement please visit this site for more info.

thank you

http://www.prohibitioncosts.org/endorsers.html

Posted by: davinita | January 23, 2008 5:20 AM

The Dems not only need to elect a President, but also elect a more compelling majority in Congress...

Posted by: Spectator
==========================
Here! Here!
Neither Hillary, Obama, nor John will be able to accomplish very much if the Republican Filibuster machine continues. We also don't want to see congress shift too far to the Left or we will get some really bad legislation just like the rubber-stamp that Dubya had his first six years in office!

Posted by: wilthomas | January 22, 2008 2:53 PM

Most of the Democrats and Republicans have no clue- the fact is, the overall monetary system and thus vast economy is out of their hands. However, one candidate wants to make changes and has a plan to give America control again:

Ron Paul & Economics - Saving the Economy; Saving America

http://ronpaul.myfeedportal.com/viewarticle.php?articleid=37

Personally speaking, the videos at the end were great.

Posted by: davidmwe | January 22, 2008 2:46 PM

I won't be able to hold my nose and vote for someone who isn't a Repuke, if Hillary is running.

Hillary is Repuke Lite. She will not stop the war and she will cover up for Chimpy.

Posted by: TomIII | January 22, 2008 2:44 PM

Why should I vote for Democrats when they always wuss out?

The Demowussies are going to be a rubber stamp for Chimpy just like the Repukes were.

This stimulus package is garbage. Giving us $800 in tax dollars only deepens the federal debt and tightens the lending pool.

And as for Beanie-Boy Bernanke's rate cut, that is goign to cause inflation.

I will need the $800 just to cope with the inflation.

We need real solutions, not just throwing money at the voters and hope the monster in the room goes away.

Posted by: TomIII | January 22, 2008 2:40 PM

Hillary Clinton is the biggest dope in the world with her desire to freeze interest rates. She obviously has no clue how mortgage interest rates work and how markets work in general. She is a total loon!!! Will someone please get her back in the kitchen baking cookies for Chelsea.

Posted by: charko825 | January 22, 2008 2:21 PM

Wow, I hope this problem doesn't hurt Halliburton in the Dubai stock exchange.

Posted by: grimmix | January 22, 2008 1:54 PM

Why don't the Dem Pres. candidates just acknowledge that we're stuck with this turkey-President, and, that the elected Dems in Congress must deal with him and his filibuster-proof large minority of Repubs in Congress?

They can always go after that Repub congressional minority and what it stood for in the era when they were the majority and what it stands for now.

The Dems not only need to elect a President, but also elect a more compelling majority in Congress...

Posted by: Spectator | January 22, 2008 1:04 PM

"...But [Bush] has not dug his heels in on that." So clearly Democrats should not pressure him, and only show "disunity" when they do.

Pete, I know it's tough. Eight years of media fawning for the Chimp in Chief are about to draw to a close. Old habits die hard.

Posted by: HeavyJ | January 22, 2008 12:15 PM

I'm with Robert Brown. Things are looking bad out here. Tearing each other down destroys the party. Come November Democrats are going to have to vote for one of these candidates. It would be awful if the we felt we had to "hold our noses" once again to vote for anyone but a Republican.

Posted by: leap1 | January 22, 2008 11:55 AM

Weird. It's as though Peter Baker has slept through the last seven years.

Posted by: zukermand | January 22, 2008 10:38 AM

It seems that Bush stays the course again. Low interest rates and a huge deficit spending in Iraq leads to high inflation. Only Ron Paul has an answer to this crises.
http://www.youtube.com/watch?v=XaxdUPNYj2s

Posted by: wegmann | January 22, 2008 10:35 AM

Dear Candidate,
First, I would like you to know that this e-mail is meant for both the Clinton and Obama campaigns. I have already made up my mind who my candidate for President is and it is not, by any long shot, a Republican. I think a person would have to be insane to vote for another Republican after the worst 8 years in American politics.

This e-mail is to advise you both that the recent debates and arguments on both sides are beginning to turn people off. I see two down sides on these personal attacks. Number one, it gives Republicans ammunition to use against whomever is the eventual Democratic nominee. Secondly, it makes your loyal supporters disheartened and may affect the Democratic turn out on election day.

Please STOP!!!!

Regards,
Robert W. Brown, Sr.

Posted by: rwdiddy1 | January 22, 2008 8:11 AM

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