- The Washington Times - Friday, February 13, 2009

The role of three Senate Republicans who helped dictate the scaled-down size of the economic stimulus package has rankled some Democratic strategists and policy advisers who are forecasting more trouble ahead.

The bill “pared back items dear to both liberals and the business community. And it revealed a political reality that House Democrats are loath to accept,” said party strategist William Galston, chief domestic policy adviser in the Clinton White House.

“With Senate Democrats short of a 60-seat majority and most Republicans staunchly opposed to the administration’s initiatives, Senate procedures put a handful of Republican moderates in the driver’s seat,” Mr. Galston said in a memo circulating on Capitol Hill Thursday.

He was referring to three Republican senators, Pennsylvania’s Arlen Specter and Olympia J. Snowe and Susan Collins, both of Maine, whose votes broke a Republican filibuster and enabled Democrats to send the bill into conference with the House.

Democrats know they cannot always count on these three Republican senators in future battles, and that raises a troublesome legislative hurdle for President Obama that could block key parts of his agenda.

House and Senate Democratic leaders squabbled during negotiations Wednesday to reconcile the Senate’s $838 billion bill and the $819 billion House-passed version. A tentative deal announced by Senate Majority Leader Harry Reid, Nevada Democrat, was called into doubt when House Democratic leaders did not show up for the conference committee meeting.

House Speaker Nancy Pelosi of California, who was particularly miffed that Mr. Reid cut $16 billion in federal funding for schools, initially withheld public approval of the deal. The line item for school construction and renovation was not included in the final deal, but a general account for aid to states that could go to school projects was boosted from the Senate’s mark of $39 billion to $54 billion.

Mrs. Pelosi eventually endorsed the scaled-down $789 billion compromise.

The Center for American Progress, the liberal Democratic think tank, said the bill was “not perfect,” adding that “problems remain.” Among its complaints, the largest single spending bill since World War II was “too small” and included tax breaks that it maintained were “non-stimulative,” such as a stop-gap provision to keep the alternative minimum tax from hitting millions of middle-income taxpayers and an $8,000 tax credit for first-time homebuyers.

Republicans were on the warpath, too, stepping up attacks on House Democrats who voted for the stimulus, attacking what they dubbed its pet project spending and pounding Democratic leaders for freezing them out of the final deliberations on the bill.

The National Republican Congressional Committee announced Wednesday that it was launching a radio ad blitz against 30 House Democrats who supported a bill “chock-full of wasteful Washington spending instead of working across the aisle to create real jobs for struggling middle-class families.”

House Republican leaders lobbed a broadside against the bill, charging that Democrats had made “a bad bill worse,” leaving “scraps for small business” assistance.

Some business groups and their allies also condemned the bill, including the National Association of Wholesaler-Distributors who called the package “fatally flawed legislation” that was “replete with spending programs which cannot conceivably be considered ‘stimulus.’ ”

But the U.S. Chamber of Commerce, which has largely supported the bill, said, “While we’re concerned with individuals items in this package, the whole is more important than the individual parts.”

For all of the importance being attached to the $789 billion economic rescue plan that was headed toward swift enactment, “it is hardly sufficient - and probably not the most important component of the overall [economic] program,” Mr. Galston said. The threat of insolvent banks would make this week’s stimulus bill fight look “easy in comparison,” he added.

He warned that the Obama administration could end up like Japan in the 1990s when it tried numerous stimulus spending plans but failed to end a decadelong recession because it did not deal with its failing banking system. He noted ruefully that Wall Street had given the Treasury Department’s preliminary financial rescue outline a resounding vote of no confidence Tuesday when the Dow plunged 382 points.

“Serious observers believe that recovery cannot begin until we acknowledge that losses in the financial system amount to some trillions of dollars, rendering many institutions insolvent,” he said.

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