Economy

Senate Dems Compromise Away Best Parts of Recovery Plan

Senate Democrats on Friday bartered away key elements of the more robust plan approved by the House.

Determined to pass something in the way of a stimulus package, Senate Democrats on Friday bartered away key elements of the more robust plan approved by the House.

Senate Majority Leader Harry Reid, D-Nevada, and his caucus colleagues got what is being called a "bipartisan agreement." But this is not a case of less being more.

The Senate's $780 billion plan is still a budget buster.

It's just not focused on spending as much of the money as the House sought to on renewing the economy.

In order to get the votes of two Republican (Maine's Susan Collins and Pennsylvania's Arlen Specter) and perhaps another (Mainer Olympia Snowe) that were needed to undermine the threat of a GOP filibuster, Reid surrendered $86 billion is proposed stimulus spending. In doing so, the Democrats agreed to cut not just fat but bone, and to warp the focus and intent of the legislation.

The Senate plan is dramatically more weighted than the House bill toward tax cuts (which account for more than 40 percent of the overall cost of the package). This is despite the fact that there is a growing consensus -- among even conservative economists and policy makers -- that tax cuts will do little or nothing to stimulate job creation in a country that lost almost 600,000 positions in January alone. As French President Nicolas Sarkozy, no liberal, said Friday of countries that opt for tax cuts rather than stimulus: The approach "will bring them nothing" in the way of economic regeneration.

The Senate's increased emphasis on tax cuts comes at the expense of the aggressive spending in key areas that might actually get a stalled economy moving.

Spending for school construction that would actually have put people to work -- while at the same time investing in the future -- has been slashed. (Almost $20 billion slated for school construction is gone.)

Money for Superfund cleanup, Head Start and Early Start child care, energy efficiency initiatives and historic preservation projects -- all of which create or maintain existing jobs -- has been cut.

Supplemental transportation funding has been hacked.

The House's proposal to help unemployed Americans maintain their health benefits has been chopped down.

Axed, as well, has been $90 million that was to have been allocated to plan for and manage a potential flu pandemic that economists and public health experts worry could shutter remaining businesses, bring the economy to a complete standstill and throw the country into a deep depression.

The bottom line is that, under the Senate plan:

* States will get less aid.

* Schools will get less help.

* Job creation programs will be less well funded.

* Preparations to combat potential public health disasters -- which could put the final nail in the economy's coffin -- will not be made.

In every sense, the Senate plan moves in the wrong direction.

At a time when smart economists are saying that a bigger, bolder stimulus plan is needed, Senate Democrats and a few moderate Republicans have agreed to a smaller, weaker initiative.

And Republicans are still delaying passage. It could be Sunday, even Monday, before a vote is taken. And who knows what more will be lost -- in time and stimulus spending before President Obama signs a bill.

These are the fruits of bipartisan fantasies and the compromises that follow upon them. President Obama, who should have been on television addressing the nation and doing everything in his power to rally support for a sufficient stimulus plan, will be lucky if he gets anything by the President's Day deadline he set. (Even after the Senate measure passes, a difficult process of reconciling the very different House and Senate bills must take place. Then there will be more votes before any legislation gets to the president's desk.)

The White House still wants to advance this measure, as do Senate Democratic leaders. And, considering the urgency of the moment, they are probably right to try to do something. But if the final "stimulus package" proves to be insufficient to jump start the economy -- and if what is left of public confidence in the prospect of turnaround collapses as a result -- this Friday night compromise will be remembered with pained regret.

John Nichols is The Nation's Washington correspondent.