K St. ready for second stimulus

A diverse collection of interests — from city transit officials to labor unions to “clean tech” advocates — are clamoring to be added to the second stimulus package Congress may consider after the election.

Largely left out of the debate over the $700 billion rescue package directed at Wall Street’s teetering financial sector, lobbyists for other interests now believe it’s their turn to benefit from massive amounts of new government spending intended to avert a protracted recession.

{mosads}A second stimulus is not a sure thing, however. House and Senate Democratic leaders have expressed their desire to pass one. But congressional Republicans and President Bush may balk if they think the bill has become a proverbial legislative “Christmas tree” with parochial projects attached to what is advertised as an effort to boost the overall economy.

“Our success will depend on the willingness of President Bush and congressional Republicans to join us in these efforts,” said Regan Lachapelle, deputy communications director for Senate Majority Leader Harry Reid (D-Nev.).

Democrats tried to pass the second stimulus last month but it stalled in the Senate. Democrats believe momentum is now on their side, due to worsening economic conditions and the new support from Federal Reserve Chairman Ben Bernanke.

John Cline, a partner at c2 group, represents transit agencies in Houston and Los Angeles that, along with agencies in Chicago, San Francisco, Washington and other cities, have been hit hard by troubles at insurance giant American International Group. The federal government has pumped more than $100 billion into AIG to prevent its collapse.

More than 30 transit agencies have insured structured lease agreements — which are used to buy subway cars or commuter buses — through AIG. Without that support, transit authorities will not be able to reinvest in their systems, Cline said. Defaults on the agreements by the agencies could run to well over $1 billion.

“These guys are planning on spending billions of dollars on capital investment in the next few years. They won’t be able to float any of their debt,” Cline said.

Cline hopes the Treasury Department uses a portion of the $700 billion in the bailout bill to back up those agreements insured by AIG. If not, Congress should direct Treasury to do so in the second stimulus, Cline said.

Labor groups, meanwhile, want the stimulus bill to pay for new road and bridge construction to put people to work.

“It would create jobs more quickly than tax rebates. It keeps more of the dollar in the United States,” said Thea Lee, policy director for the AFL-CIO.

America’s largest labor group also wants Congress to extend unemployment benefits and provide money to strained state and local governments.

The National Governors Association and the National League of Cities among others on Tuesday wrote to House and Senate leadership, asking them to raise the federal matching rate for Medicaid payments and to increase the money spent on infrastructure projects.

“Investments in state and local governments are effective and efficient ways to speed recovery and help those most directly affected by the economic downturn,” the letter stated.

Twenty-seven states face budget shortfalls that in the aggregate amount to $26 billion.

Meanwhile, more than two dozen representatives from groups that promote infrastructure spending met last week to coordinate strategy on the second stimulus.

Lobbyists for these groups argue that more federal spending would help minimize the job losses from a recession. In a white paper being circulated on Capitol Hill, the American Shore & Beach Preservation Association, for example, says $5 billion for water resource projects would create 140,000 new jobs.

Automakers, meanwhile, may ask Congress to pass measures that would speed the allocation of around $25 billion in federal loans. Car manufacturers may also ask for another $25 billion in federal loans in the second stimulus.

“If there is a second stimulus bill, there are things we would like to have a discussion about,” said an auto industry lobbyist.

The Center for American Progress, a left-leaning think tank, wants Congress to tackle two problems at once: the bad economy and global warming. The Center has identified roughly $6 billion in energy efficiency and community block grants that could be authorized for cities and states to revitalize the local economies and lower their greenhouse gas emissions.

Several House Democrats and outside economists have also said Congress should direct some of the stimulus money toward “green-collar” jobs and green infrastructure.

“The green sector is the future of this economy,” Robert Pollin, of the University of Massachusetts-Amherst, testified at a House Education and Labor hearing on Friday. “We may not have any future unless we build that sector right now.”

Silla Brush contributed to this article.