Liberal groups lobby for new stimulus plan

The left and right alike are gearing up for another stimulus fight this fall even as the Obama administration and top Democrats say it’s too early to consider another recovery package.

A group of unions, including the AFL-CIO and the Service Employees International Union (SEIU), said they will start pressing lawmakers for a jobs bill. They said the $787 billion economic stimulus approved earlier this year, though helpful, wasn’t big enough and didn’t include enough government spending.

ADVERTISEMENT
“It was a good start. We have more information now,” said Thea Lee, policy director for the AFL-CIO. “All that info points in the direction that additional stimulus is needed.”

Rising unemployment is fueling calls for another stimulus and adding to the anxiety for the administration and Congress. The Department of Labor reported unemployment hit 9.5 percent in June, the highest rate in 26 years. It is now expected to reach double digits and could remain high for the 2010 elections.

Obama administration officials in January had predicted that the unemployment rate would peak at 8 percent if a stimulus were passed.

Republicans have seized on the latest data as evidence that the stimulus isn’t working, and House Minority Whip Eric Cantor (R-Va.), who voted against the $787 billion stimulus package, stepped up his criticism Monday.

“We stand ready and willing to work with the president to produce a bill that will actually yield results,” Cantor said in a press call. He said Republicans could work on new stimulus legislation with Democrats as long as it is heavy on tax cuts.

Cantor said that a new stimulus bill could include an income tax cut for small businesses and their employees. He said that he would ask for another meeting with President Obama to talk about the new legislation.

The left has argued that the first stimulus was too small, and that it included too many tax cuts. Liberals argue that consumers are more likely to save tax cuts, while government spending would actually put people to work.

Republicans said that tax cuts were better because they would go straight to small businesses and taxpayers. Cantor and Republicans have also criticized the stimulus for increasing the deficit, which is expected to reach $1.8 trillion this year.

The $787 billion bill passed in February with just three GOP votes and steered approximately 60 percent of its funds to government programs and less than 40 percent toward tax cuts.

Groups on the left, including the American Federation of State, County and Municipal Employees, the Economic Policy Institute and the Change to Win coalition, will begin their campaign for another recovery package in September, after Congress returns from the August recess, said Robert Borosage, co-director of the liberal economic think tank Campaign for America’s Future.

Vice President Biden offered ammunition to GOP critics on Sunday by stating that the administration had misread how bad an economy it had inherited. He didn’t rule out a stimulus Sunday, but he also suggested that the current plan needs more time to work.

“We misread just how bad the economy was, but we are now only about 120 days into the recovery package,” Biden said on ABC.

With much of the money in the first stimulus yet to kick in, the White House and top Democrats are saying it’s premature to talk about another package. Of the nearly $158 billion slated for federal agencies, just $56.3 billion has been paid out.

“The recovery package passed by Congress and signed by the president is in effect now. We’re going to see its impact,” said Nadeam Elshami, spokesman for House Speaker Nancy Pelosi (D-Calif.).

On Monday, House Republicans sent out e-mails tying Democratic House members facing stiff challenges next year to the stimulus and highlighting Biden’s remarks, and Cantor used Biden’s comments to highlight the GOP’s tax cut approach.

“It is my belief that they didn’t misread the economy,” Cantor said. “What they did is they miswrote the stimulus bill and got the prescription wrong.”

He said that another stimulus could be funded by finding efficiencies in current programs and by redirecting money in the first stimulus away from government programs and toward businesses and taxpayers. But he left the door open to more stimulus legislation, even if it led to more red ink.

When it was approved, several senior Democrats predicted the stimulus wouldn’t do enough to spark the economy because it wasn’t big enough and included too many tax cuts.

Lee, the AFL-CIO policy director, said that any new stimulus should include more infrastructure spending, unemployment insurance and relief for state and local governments, which are suffering budget crunches.