Chamber cautiously pushes economic fixes

Top officials at the U.S. Chamber of Commerce cautiously advocated measures to boost the flagging economy on Tuesday, apparently worried that the medicine from a Democratic-led Congress could be worse than the disease.

“I’m hopeful there’s a stimulus package that’s rational and limited,” the Chamber’s president and chief executive, Tom Donohue, told reporters after giving a speech about the business lobby’s agenda for the coming year.

{mosads}The idea of using fiscal levers to revivify consumer and business confidence is gathering steam in Washington as fears grow that the economy could be headed for a recession.

Chamber officials said they believed such a fate would be avoided, but they offered a number of prescriptions to aid the economy.

The Chamber’s top lobbyist, Bruce Josten, voiced support for rate cuts from the Federal Reserve and reinstating temporary business tax relief — such as allowing corporations to deduct the cost of equipment purchases more quickly — that was used to cushion the blow of the Sept. 11 terror attacks.

Josten also advocated bolder measures — namely, slashing the capital gains rate for corporations and boosting investment in the country’s roads, bridges and other infrastructure.

Though a tall order in the context of the dwindling tax revenues that would accompany a recession, using infrastructure spending as a tool to bolster growth has support in some Democratic quarters.

Josten hinted that an alliance of business interests and Democrats on the issue could help it gain steam. “We would participate vigorously in that debate,” he said.

Both congressional Democrats and Republicans are preparing ideas for boosting the economy in the face of $100 a barrel oil prices, a dismal jobs report and a bad housing market.

President Bush may propose a stimulus package during his State of the Union address at the end of the month.

The parties will likely take different tacks on the matter, with Democrats favoring tax relief for lower- and middle-income families and increases in unemployment benefits and aid for the poor.

Meanwhile, Republicans are likely to prefer tax breaks for businesses and permanent cuts in marginal rates. GOP lawmakers will likely push to attach language extending the Bush tax cuts of 2001 and 2003 to any stimulus package.

Donohue reiterated the prediction of his chief economist last month, saying, “The economy would dodge the bullet, and we will not have a recession.”

He nonetheless suggested the Chamber could support some legislative intervention to help homeowners facing foreclosure, but warned against changes that would disrupt the credit and financial markets.

“There’s nothing wrong with the idea of helping responsible homeowners stay in their homes. But there shouldn’t be a bailout of investors who made the wrong bet,” he said.

Despite the distraction of the electoral season, Donohue and Josten argued that the business lobby could accomplish some legislative goals this year.

They said the Chamber would focus on education policy with the reauthorization of No Child Left Behind, aviation matters, health information technology and the protection of intellectual property.

The group will also continue to fight tax increases as well as efforts to allow unions to conduct “card check” elections.

Donohue argued that presidential politics could aid the enactment of trade deals with Peru and Colombia, saying the president-elect “might like to have those things done before they get into office.”

He added, “Hopefully they’ll pass the word that that’s what they’d like Congress to do.”

Citing business’s urgent need for workers, Donohue also voiced optimism that Congress would tackle targeted immigration reform, despite last year’s debacle on the issue in the Senate.

“I think they’ll probably call it something else,” he said. “But I don’t believe we can go forward without figuring out how to get more seasonal workers.”

The business lobby could also score some wins on the regulatory front during the Bush administration’s last year. Josten said the Chamber could see progress on opening up more federal lands to oil and gas exploration and employer-employment areas.