Democrats Split on Stimulus as Job Losses Mount, Deficit Soars
Democrats who control the levers of power in Washington are divided over whether to push for more deficit spending to end the recession and stem job losses, complicating the possibility of a second stimulus bill.
“We need to be open to whether or not we need further action,” House Majority Leader Steny Hoyer, a Maryland Democrat, told reporters yesterday. Senate Majority Leader Harry Reid of Nevada countered that “there is no showing to me that another stimulus is needed.”
President Barack Obama underscored the dilemma by addressing both sides of the argument. In an interview with ABC News yesterday, he said unemployment approaching 10 percent is something “we wrestle with constantly.” He added that spending more borrowed money is “potentially counterproductive.”The split reflects two major challenges facing the Democrats: Record budget deficits that make additional spending much tougher to pass and a 26-year-high unemployment rate of 9.5 percent that is expected to rise to double digits.
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The U.S. economy lost 467,000 jobs in June, exceeding economists’ forecasts, while the federal budget deficit is projected by the Congressional Budget Office to top $1.8 trillion this year and $1.4 trillion in fiscal 2010. That’s provoked criticism of the $787 billion stimulus bill passed in February as either wasteful or not large enough.
Borrowing Surge
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With the White House and congressional Democrats focused on a major health-care overhaul and a climate bill, some lawmakers expressed pessimism about the likelihood of such legislation.
Deferring to Obama
“I’m not sure how you would do it,” said the Senate’s second-ranking Democrat, Dick Durbin of Illinois. He said he would leave any decision on the need for a fiscal stimulus to “the president’s evaluation.”
Republicans seized on the unemployment rate and job losses of about 6.5 million since the recession began in December 2007 as validation of their vote against the measure in February.
Senate Republican leader Mitch McConnell of Kentucky said in a floor speech yesterday that Democratic proponents of the stimulus program “over-promised on results and now their predictions are coming back to them.”
McConnell mocked the idea of another stimulus. He called it “mind-boggling” and a worse idea than the previous one, which he said “has been demonstrably proven to have failed.” He added, “There is no education in the second kick of a mule.”
Bernstein Defense
The White House dismissed calls to augment or alter the initial legislation.
“It’s working, it’s demonstrably working,” said Jared Bernstein, chief economic adviser to Vice President Joseph Biden, whose office is overseeing the rollout of the first stimulus....
http://www.bloomberg.com/apps/news?pid=washingtonstory&sid=aIHpsBT0JHFcWhy would Reid lay down that marker now?