Obama, Republicans seek common ground on economy
President Obama’s economic sit-down with congressional leaders Friday ended with senior Republicans sounding less confrontational than they had in recent days. As they emerged from the White House, however, GOP leaders released a counterproposal to the Democrats’ $825-billion economic stimulus package -- suggesting that although the gulf separating the two parties on economic policy may have narrowed, it has not closed.
If lawmakers fail to find common ground, Obama may have to choose between compromising some features of his economic strategy and pursuing his goal of broad bipartisanship in the face of the deepening economic crisis.
Leaders of both parties said they expected their differences to be resolved. The House could vote on the stimulus plan as soon as Wednesday. White House Press Secretary Robert Gibbs said the president would go to Capitol Hill early next week “to talk to the Republican caucuses and solicit their input and their ideas.”
“Truly, the president was leading us to be united, not divided,” said Senate Majority Leader Harry Reid (D-Nev.).
“The administration strikes me as open to our suggestions, and we made a number of them,” said Senate Minority Leader Mitch McConnell (R-Ky.).
The Democratic plan, developed jointly by House Democrats and Obama aides, emphasizes stimulating economic demand with fast-acting tax breaks for workers and businesses, creating jobs through direct government spending on infrastructure and other projects, and investing in energy and the environment to promote long-term growth.
It includes about $550 billion in spending programs and $275 billion in tax breaks.
Senate Democrats also decided Friday to extend a $300, one-time bonus benefit to Social Security recipients as part of their plan, a proposal that would add $17 billion to the overall bill.
The GOP proposal emphasizes the party’s traditional approach: broad cuts in income and business taxes, and no additional government spending. Republicans did not estimate how much their plan would cost.
“Obviously, we’re Republicans. We’ve got ideas that lowering tax rates and allowing people to keep more of what they earn will allow them to spend that money, invest that money, or save it -- all of which are good for the economy,” said House Minority Leader John A. Boehner (R-Ohio).
GOP leaders indicated that even if they couldn’t sign on to the Democrats’ plan, they would not try to block the stimulus package altogether.
“I do think we’ll be able to meet the president’s deadline of getting the package to him by mid-February,” McConnell said.
What’s not clear is whether that means Congress will deliver the package with enough Republicans to achieve Obama’s goal of demonstrating that a new era of bipartisan cooperation is at hand.
“I know that it is a heavy lift to do something as substantial as we’re doing right now,” Obama said as he opened the meeting in the Roosevelt Room. “I recognize that there are still some differences around the table, and between the administration and members of Congress about, particularly, details on the plan.
“But what I think unifies this group is a recognition that we are experiencing an unprecedented, perhaps, economic crisis that has to be dealt with, and dealt with rapidly.”
Republicans have expressed concerns that Obama’s plan would spend the stimulus money too slowly to have much effect on the declining economy.
But Gibbs said that “our analysis of the legislation right now is that 75% of this money will be spent in the next 18 months, to create jobs and to get people working and to get the economy moving again.”
“Absolutely, it’s stimulative. It puts money back in people’s pockets that we believe they’ll spend, and help the economy,” he said.
Obama has proposed a $500-per-worker tax break, the first stage of the middle-class tax cut he promised during the campaign for families with less than $250,000 in annual income.
The Republican counterproposal centers on a reduction of the two lowest marginal tax brackets -- the 10% bracket for the first $8,350 in income and 15% for the first $33,950.
That means that all taxpayers who owe taxes would get about a $500 tax cut, or $1,000 for a married couple. There would be no phase-out for higher-income earners, so all taxpayers would get the same benefit.
Democrats argue that the Republican tax-cut approach does nothing to help Americans who don’t owe income taxes -- such as low-income workers and Social Security recipients. About 40 million Americans file tax returns but have too little income to pay taxes.
Roberton Williams, an economist with the Democratic-leaning Urban Institute and the nonpartisan Tax Policy Center, noted that under the GOP proposal, rich people like Bill Gates would get the same tax cut as middle-income earners. And some of those on the lower end of the income scale would actually get less than taxpayers who earned more.
“To the extent that any of the savings go to people with high incomes, you are weakening the stimulus effect because the richer you are the more likely you are to save it instead of spend it,” Williams said.