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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.

By Washington Post Editor  |  January 22, 2008; 7:20 AM ET
Categories:  Barack Obama , Candidates , John Edwards , Morning Cheat Sheet , The Debates , The Democrats  
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