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Posted by on Jan 25, 2009 in Economy, Politics | 8 comments

Is Bipartisanship Evaporating On Obama’s Economy Stimulus Plan?

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Is bipartisanship evaporating on President Barack Obama’s stimulus plan — where each side, after talking about the lofty and elusive goal of national unity, reverting to the dominant position of the past two decades: where each party digs in its heels?

What is unfolding now could ultimately be part of the process where party leaders forcefully air their preferences and, in the end, come together and pass a compromise plan that can’t be highly touted by one side and demonized for four years by the other.

But with less than a week in office, one thing is now clear the Love Boat is leaving its moorings:

In an exclusive “This Week” interview, Speaker of the House Nancy Pelosi, D-Calif., defended the $825 billion economic stimulus package against Republicans’ accusations that Democrats are ignoring their proposals.

Obama will meeting with top GOPers in Congress this week. Does “ignoring” mean not totally accepting and agreeing with them? If that’s the definition, then Republicans could find they are ignored. ABC News continues:

The recovery package cleared the House Appropriations, Energy and Commerce and Ways and Means committees this week, but the voting has been along party lines.

“Because the Republicans don’t vote for it doesn’t mean they didn’t have an opportunity to,” Pelosi told ABC News’ George Stephanopoulos. “The Republicans asked for a couple things. … They didn’t vote for the final bill but we voted for some of their amendments.”

House Democratic leaders are preparing to bring the stimulus package to the floor next week. Following a bipartisan meeting with President Obama on Friday, Pelosi told Stephanopoulos that Democrats are “open” to ideas put forth by Republicans.

“We will judge them by their ability to create jobs, to help turn the economy around, to stabilize the economy and to see how much they cost,” she said. “But we’re open to them and we’ll review them and it all has to be done right away because our bill has to come to the floor this week.”

One sign that the plan is going to need a bit of work before it can truly be called “bipartisan” is that someone who is emerging as one of Obama’s best buds, unsuccessful 2008 Republican Presidential candidate Senator John McCain, says that, in its present form at this point, he’ll vote against it:

Sen. John McCain (R-Ariz.) told “Fox News Sunday” this morning that he would not support the stimulus package as the House Democrats have written it because it includes too much wasteful spending.

The stimulus currently includes $275 billion in tax cuts and doesn’t include Republican input or a spending timeline, McCain said.

“There should be an end point to all of this spending.say two years…The plan was written by the Democratic majority in the House primarily. So yeah, I think there has to be major rewrites, if we want to stimulate the economy,” McCain said. “I am opposed to most of provisions in the bill. As it stands now. I would not support it.”

McCain wouldn’t say whether he would filibuster it.

“We need serious negotiations,” he said. “We’re losing sight of what the stimulus is all about and that is job creation.”

But New York Senator Chuck Schumer predicts it’ll pass — with Republican votes:

Sen. Charles Schumer (D-N.Y.), however, disagreed with McCain, saying he expects a number of Republicans to support the $825 billion stimulus package.

“I think you’ll find large number of Republicans behind this,” Schumer said. “I regret Sen. McCain said he won’t be voting for it.”

The Republicans would seem to be on a slippery slope.

Most Americans won’t be tuned in right now on the intricate details of a stimulus plan. The details will have to be solid. Most Americans want to know that the President and Congress are taking action. And if it turns out that the Democrats, mainstream media, some Republicans and experts quoted by the mainstream media say it is solid and something that’s needed NOW, Republicans will likely see their already reduced national clout further shrink.

The reason: this is an issue where talk show hosts and new media such as weblogs won’t be likely to sway opinion. The perception of a political party dragging its heels backed up by millionaire radio and cable Republican talk show hosts won’t cut it amid seemingly nonstop news such as this:

1. Economists expect WORSE NEWS this week:

The U.S. economy contracted violently in the fourth quarter, with gross domestic product falling at its fastest pace in more than 25 years, economists said ahead of what promises to be a grim week of economic news.

“Real economic activity fell off a cliff during the fourth quarter, producing a sharp drop in employment, output and spending,” wrote economists at Wachovia.
And the worst part is that it’s not over. Economists expect another huge decline in the first quarter, with a smaller contraction in the second quarter.

GDP is expected to have fallen at a 5.5% annualized rate in the final three months of last year, according to the median forecast of economists surveyed by MarketWatch. That would be the biggest decline since the 6.4% drop in early 1982 and one of the worst quarters in the post-World War II era.

The government will release its first estimate of fourth-quarter GDP on Friday, the culmination of a very busy week on the economic calendar. See Economic Calendar.
Other major releases will include durable-goods orders for December, home sales for December, and consumer confidence surveys for January.

2. Various news reports say banks — and more banks — are in trouble. And, the New York Post reports, the Obama administration is under pressure to do something about the banks’ more profound illnesses ASAP — including looking at the option of nationalization:

Congressional leaders are pressing the White House to come up with a plan as soon as this week to save the banks and jumpstart the economy.

As the Obama economic team huddles this weekend in an attempt to hammer out the framework of their plan, three options have been bandied about:

* Nationalizing the banks.

* Creating a government-owned “bad bank” to take the toxic assets off of the bank’s balance sheet.

* Continuing the Bush Administration rescue plan of pumping in taxpayer money on an as-needed basis.

A nationalization plan would likely wipe out all shareholder equity, including the preferred shares, and turn ownership of the banks over to Uncle Sam. It’s a long shot plan few favor – for many reasons. One, it would balloon the federal debt and, most likely, fuel a spike in inflation. On the upside, it would stop the drip-drip-drip of asset meltdown the banks and the Treasury Dept. have been dealing with since October – with no end in sight.

What will Obama do?

One clear option is to say “I won the election” (which he has said although reports of it from critics left out the other parts that he said that changed the meaning somewhat) and shove it through with all Democratic votes.

The upside: he has his plan in place.

The downside: it is his plan and the Democrats which means a) the era of megapartisanship will continue because the well will have been resupplied with poison and b)Republicans wouldn’t have any stake in its success. The larger issue here is the United States acting as the United States.

Another option is to seek to do good, old-fashioned horsetrading on the issue so enough GOpers come over to pass it and feel satisfied that some of their key ideas were included and some things that bothered them were removed.

It sounds like that is what could happen:

A top economic adviser to President Barack Obama says the president is pushing for a balanced approach to reviving the economy — using both new spending and tax cuts.

Republicans say the $825 billion recovery package working its way through Congress relies too much on government spending — and not enough on tax relief for families and businesses.

Top Obama adviser Lawrence Summers says some Democrats wanted the package tilted even more toward spending, but that the president sought middle ground.

This story deals with details as they stand now…but it seems to also send a signal that the plan could be a work in progress.

If a plan does pass with enough GOP support, it will face a segment of the Republican party that will still be against it: the segment allied with conservative talk show hosts. Unless Obama lets the Republican party write the whole plan, don’t look for that segment of the party to approve it. Some Republicans who vote for a plan pushed by Obama could even find themselves targeted by those other Republicans in their re-election bids.

But the fact of life for Republicans right now is this:

1. Obama is riding high in the polls, even though the numbers have come down now a bit closer to earth. He still isn’t exceeding JFK but he’s close to those numbers.

2. Republicanism as a brand name is on hard times. Gallup finds party identification with the GOP is the lowest since 1983:

An average of 36% of Americans identified themselves as Democrats and 28% as Republicans in 2008. That eight-point advantage is the largest for the Democratic Party since Gallup began regularly conducting its polls by telephone in 1988.

Prediction: Some bipartisanship will start to sag but in the end the plan that passes will be supported by members of both parties. Those who vote against it will find their refusal used against them in their re-election bids — particularly if there is any progress at all on the economy.

Here’s NBC’s David Gregory’s take on how Republicans are likely to respond to the plan:

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