Stimulus compromise

After spending its month-long vacation trying to settle the disagreement over an economic stimulus package through blame-fixing and name-calling, Congress is back on the job and, in one chamber at least, suddenly embracing cooperation and compromise just as Federal Reserve Chairman Alan Greenspan says the stimulus may not be needed.

This adds powerful new evidence in support of the idle hands theory. It also is a strong indication that the American public has made clear its disgust that, nearly a full year after this recession started and more than four months after terrorist attacks deepened it, Congress has failed to enact broad legislation to give the economy the immediate jolt it so badly needs. Most Americans did not have a month-long vacation, so this ability to balance the demands of work, family and scolding Congress is multi-tasking at its finest.

The compromise under consideration was put forth by Senate Majority Leader Tom Daschle, labeled an “obstructionist” by Republicans after the Senate refused to act late last year on a House-approved economic plan. The basis of Sen. Daschle’s compromise is the notion that, with millions of Americans genuinely hurting and in need of immediate help, both parties should drop their most contentious proposals and approve legislation composed only of items on which they agree. This bold idea has drawn words of encouragement from President Bush and cautious expressions of interest from Senate Minority Leader Trent Lott.

This scaled-back stimulus plan contains two components of the stalled legislation rated highly by experts for their potential to relieve the immediate distress of the unemployed and to get them back on the job – an extension of unemployment benefits (which also would provide needed relief to recession-weary states) and the creation of new tax breaks for business investment. It tables two of the most contentious proposals – the Democratic proposal to provide health coverage to the newly unemployed and the Republican proposal to accelerate income tax rate cuts approved last year. The national economy may recover without stimulus, as Mr. Greeenspan said in testimony before a Senate Budget Committee hearing Thursday, but given that the economies in some of the hardest-hit states will not, a small stimulus package that helps out with unemployment but does not further reduce state revenues remains in order.

Quick action on the Daschle compromise is expected in the Senate; passage may come within days, although it still needs state protections. The outlook is not so promising in the House, where Majority Leader Dick Armey and Majority Whip Tom DeLay still object to an economic stimulus plan that does not contain everything they want. Perhaps Reps. Armey and DeLay need reminding that the vacation’s over.