By Ian Swanson - 01/27/09 07:57 PM EST
House Democrats aren’t eager to consider another request for funds to bail out the financial system, despite warnings that the $700 billion rescue package will not be enough.
“Let’s take it one step at a time. We just dealt with the first tranche of money,” said Rep. Chris Van Hollen (D-Md.), who is in charge of the House Democrats’ campaign arm.
Rep. Earl Pomeroy (N.D.), a Blue Dog Democrat, suggested rising federal debt levels will weigh on lawmakers asked to spend even more on the bailout.
“We have a crumbling economy that requires a response,” he said. “But we have a historic debt level that to some degree will inhibit resources we throw at the problem.”
He said lawmakers are stuck between not wanting to worsen the country’s fiscal straits and not wanting to respond too weakly to the worst recession since the Great Depression.
Both Pomeroy and Van Hollen spoke shortly after the House, in a symbolic move, voted in favor of a resolution disapproving the release of the second half of the $700 billion Troubled Asset Relief Program (TARP). The vote was largely meaningless because the new Obama administration already had access to those funds, but it highlights the problems Obama will face in making a new request.
Still, some lawmakers signaled they are more than willing to show the new administration the money.
Rep. Charles Rangel (D-N.Y.), the chairman of the Ways and Means Committee, said as long as Presidnet Obama tells Congress exactly how he’d use a third tranche of funds, he’d support it.
“If they ask for it, I’ll be glad to vote for it,” Rangel said.
Mark Zandi is a democrat
Democrats hailing former John McCain economic adviser Mark Zandi’s support for their $825 billion stimulus package have been leaving out a key fact: He’s a registered Democrat.
In an interview with The Wall Street Journal in July 2007 that referred to Zandi as a registered Democrat, Zandi called himself “eclectic” and noted that he had “done work for both Democrats and Republicans.”
Zandi did not return requests for comment.
In the last few days, House Majority Leader Steny Hoyer (D-Md.) and Majority Whip James Clyburn (D-S.C.) both used Zandi’s support for the stimulus to argue it should win bipartisan praise. Hoyer went so far as to say that had McCain won in November, he would have pursued a similar path on the stimulus as the Democrats.
Republicans have noticed the reliance on Zandi, and are starting to take steps to counter it.
Rep. Mark Kirk (R-Ill.) in a Jan. 21 memo described Zandi as one of several “friendly economists” who support the Democratic stimulus. He noted Zandi’s contributions to Sestak, and that Zandi is quoted in the House Appropriations Committee’s report on the stimulus “no less than six times.” Other economists quoted were Christina Romer and Jared Bernstein, who both have roles with the new administration, Kirk noted.
Geithner’s China blast criticized
Treasury Secretary Timothy Geithner’s description of China as a currency manipulator during a confirmation hearing drew attention, but not universally good reviews.
“I think it was a very dangerous remark,” said Barry Bosworth, an economist for the Brookings Institution.
Whether Geithner’s comments reflect a shift from the Bush administration, which irritated some domestic groups by not describing China as a currency manipulator, is unclear. Geithner made the comments to the Senate Finance panel, which includes several members who have backed legislation to punish China for its currency policy.
Convincing China and Japan to expand their domestic spending is seen by many as a step necessary to fix the global economy. China and Japan, along with Germany, are world economic powers with savings surpluses. The huge budget and trade deficits carried by the U.S. are the other half of this imbalance.
The effect of this is most notable in the U.S.-China relationship, which has been characterized by a widening trade deficit that critics of China say is exacerbated by an artificially low Chinese currency that makes that country’s exports less expensive.
Obama has not spoken with the leaders of either China or Japan since becoming president, according to a senior administration official. He also is sending Valerie Jarrett to the World Economic Forum in Davos, Switzerland, this weekend. Larry Summers, the head of the National Economic Council, was to attend the conference with National Security Adviser Jim Jones, but the two pulled out.
The next obvious opportunity for a meeting would be when the G7 finance ministers and central bank leaders convene Feb. 13-14 in Italy, but that meeting would not include China or other powerful developing countries such as India and Brazil.
“The right place to address this is the group of 20,” said Bosworth, referring to a larger economic club that includes China. Heads of state are not to meet until an April 2 G20 meeting in London, but Bosworth said he wouldn’t be surprised if there was an attempt to accelerate it.
Mike Soraghan and Sam Youngman contributed to this article.