Maine delegation urges stimulus package

AUGUSTA – All four members of the state’s congressional delegation are supporting some sort of economic stimulus package and agree Congress should move swiftly to adopt a plan. But there are disagreements on how best to stimulate economic growth.

“We need to act and act soon,” said Republican Sen. Olympia Snowe, a member of the Senate Finance Committee that has been working to draft a package for consideration by the full Senate. “I think we should have stayed in Washington [last weekend] and worked on a package – and we should stay until we get it done.”

In meetings over the last week with Federal Reserve Board Chairman Alan Greenspan and former Treasury Secretary Robert Rubin, Snowe said some important principles were discussed.

“We must ensure that the package we craft be comprised of provisions that will have a strong, immediate impact; be of limited duration; and have no negative impact on long-term interest rates,” she said.

Snowe said a package of about $75 billion is needed in addition to the $40 billion emergency appropriations measure adopted last month after the terrorist attacks. She said spending for defense and additional security under that legislation also would help stimulate the economy.

“It’s easier to say what shouldn’t be in the package than what should be,” said Democratic Rep. Tom Allen. “The permanent tax cuts being proposed by President Bush are not the way to stimulate the economy. We need a temporary stimulus not a long term drag on the economy.”

Allen does support the Bush proposal to give cash to those who got less than the full $300 “rebate” under the tax cut legislation approved earlier this year. He said it is important to put cash in the hands of those who will spend it. But he also said some of the proposals that have been advanced are mistaken.

“I do have concern with some of Susan Collins proposals,” he said. “She proposes capital gains tax cuts to investors. If you enact that kind of provision, it will drive the stock market down because people are more likely to sell their stock if you reduce capital gains rates. That seems to me to be a fundamental mistake.”

Collins was not available to respond to that criticism, but her spokeswoman, Felicia Knight, sharply criticized Allen saying he either had not read the proposal or did not understand it.

“He is parroting the standard party-line criticism to a general capital gains rate cut,” Knight said. “What Sen. Collins has proposed is an incentive for people to invest in small businesses that would require people to hold the stock for three years and would not apply until three years after the date this legislation is enacted.”

That is only one element of a package Collins announced last week that she would like to see included in stimulus legislation. She wants additional job training funds and an extension of unemployment benefits along with some other small business tax cuts in the package, but is willing to consider other proposals.

“I am certainly open to the idea of other measures that would help put more money in the pockets of working families so we can stimulate consumer confidence,” Collins said earlier. “But our first focus needs to be on those workers who have lost their jobs.”

Rep. John Baldacci, a Democrat, said he has not yet decided which specific proposals should be in the package. But he agrees Congress needs to act swiftly to pass a measure that puts a significant amount of money into the hands of consumers.

“It’s spending that will stimulate the economy,” he said. “And we need to do that quickly. It’s not going to be just what I want or any other member wants, there will have to be compromises to get this through in a bipartisan manner.”

Baldacci said he also supports the idea of providing help to state and local governments so they do not end up cutting spending or raising taxes and thus undercutting any federal economic stimulus efforts.

There also is broad support for a significant increase in federal expenditures for infrastructure projects ranging from Amtrak improvements to highway and bridge construction. Those sorts of expenditures are key to economic recovery, said State Economist Laurie LaChance.

“Those sort of investments in public infrastructure have tremendous spinoffs in the economy and we need that to lift us out of the recession,” she said.

Members of congressional leadership met with President Bush on Wednesday and expressed the hope a draft economic stimulus plan would be ready by the end of the week.