With caution, Dems reach out to GOP on stimulus package

Democratic leaders are increasingly looking for bipartisan action on a stimulus package, seeking to work with Republicans and President Bush to get a win after a confrontational 2007 brought many losses.

Democrats had considered trying to roll out a stimulus package before Bush’s State of the Union address on Jan. 28. But in their letter to Bush last week, House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) emphasized that neither side should come out with a package until Bush meets with congressional leaders.

{mosads}And as Pelosi met with Federal Reserve Chairman Ben Bernanke Monday, she stressed bipartisanship.

“We look forward to meeting with the president and Republican congressional leaders to find a solution that is timely, targeted and temporary,” Pelosi said after the meeting.

Aides say they recognize that if they want to get a stimulus package signed into law, they will have to work cooperatively with the White House and congressional Republicans.

But the specific terms of what Democrats want to do are still unclear. The Democratic leadership team is to meet Tuesday evening as lawmakers return to Washington to review their options on a stimulus package.

Many Democrats favor a boost in spending to get the economy moving, along with tax rebates for individuals, potentially even for those too poor to pay income taxes. Republicans have floated proposals for tax breaks for business to encourage investment.

Democrats were faulted last year for failing to move major parts of their agenda, particularly efforts to change policy in Iraq. But as public attention shifts away from Iraq and foreign policy to the economy and domestic policy, Democrats feel like they are on more comfortable terrain.

It was House Financial Services Committee Chairman Barney Frank (D-Mass.) who floated the idea of an economic stimulus early last month after Democrats held a closed-door economic forum at the Capitol with financial experts and labor and business leaders, such as former Treasury Secretary Lawrence Summers.

But congressional Republicans say the solution Democrats are seeking is tax increases, and have frequently reiterated suspicions that they lie at the heart of the Democratic economic plan.

“American families already are feeling uneasy about the rising costs of gasoline and energy, healthcare, housing and a record tax burden,” House Minority Leader John Boehner (R-Ohio) said after Pelosi’s meeting with Bernanke. “They can’t afford an agenda loaded with tax hikes to pay for more wasteful spending.”

Despite the calls for bipartisanship on the stimulus, where Republicans and Democrats feel they may sink or swim together, economic issues are increasingly expected to be a major issue in 2008 election contests.

A CNN poll conducted last week found that 61 percent of respondents believe the economy is in a recession, compared to 46 percent in October.

Accordingly, Democrats are pulling many aspects of their agenda under the umbrella of their economic response.

For example, they will project the planned Jan. 23 vote to override Bush’s veto of the State Children’s Health Insurance Program through the lens of the worsening economy. In addition, they want to cast the three bills the House has passed on the foreclosure crisis as being components of an economic reaction.

Democrats are also extending their focus beyond the immediate stimulus to make broader appeals for economic change, with three House leaders giving speeches on the economy this week. Frank was to speak to Harvard’s Kennedy School of Government Monday, but the speech was postponed. House Majority Whip James Clyburn (D-S.C.) was to speak on the economy and the stimulus package Tuesday before the U.S. Chamber of Commerce.

And Democratic Caucus Chairman Rahm Emanuel (Ill.) gave a speech Monday proposing a “New Deal for the New Economy” to address globalization and people’s worries about the worsening economy.

“Addressing the issues that impact middle-class families is critical if we want American workers to embrace the new economy and take advantage of new markets and new opportunities,” Emanuel said in remarks to the Chicago Commercial Club’s Civic Committee.