By Joseph J. Schatz and Richard Rubin CQ Staff
Published: 01-09-09
President-elect Barack Obama ’s top economic advisers will face some pointed questions about the tax cuts he plans to seek as part of the economic stimulus package when they brief the Senate Democratic caucus Thursday.
A number of Democrats are beginning to ask whether the $300 billion devoted to tax cuts in the plan would actually create jobs – or be better used on infrastructure spending.
Emerging from a bipartisan closed-door meeting Thursday morning Senate Finance Committee members expressed support for moving quickly on a stimulus plan but voiced concerns about finding the right mix of tax breaks and infrastructure spending in a package likely to total about $775 billion.
“The key here is to create jobs. The key here is to restore confidence in the economy. And what I want to do and I think others are concluding is to make certain that every provision that we’re looking at can really be measured against the creation of jobs” Sen. John Kerry D-Mass. told reporters after the meeting. “There are a lot of worthwhile things. There are some worthy efforts that we want to undertake but they may not produce as many jobs.”
Finance Committee Chairman Max Baucus D-Mont. said the meeting the committee’s first of the year had a “positive constructive tone” and that his panel would likely mark up a stimulus package the week of Jan. 19. Tax writers of both parties – and in both chambers — have made it clear that they intend to put their stamp on the bill.
In the House Ways and Means Committee Chairman Charles B. Rangel D-N.Y. said panel members met with Obama aides Thursday. While remaining mum about details Rangel said there were “no bumps” and lawmakers were starting to look at legislative language.
He indicated that there had been “some slippage” in plans for a markup at the end of next week but did not elaborate.
Obama economic advisors Lawrence Summers and Jason Furman will brief Senate Democrats Thursday afternoon and “many senators are going to ask a lot of questions: Why this and why that?” Baucus said. “And again it’s early and we’re working our way through the search for the truth.”
Several members criticized a proposed tax credit for companies that hire new workers or avoid layoffs.
“I’m not that excited about that because if somebody’s able to hire they’re probably going to hire anyway” Kerry said. “I would rather spend the money on the infrastructure on direct investment on energy conversion on other kinds of things that much more directly much more rapidly and much more certainly create a real job.”
Sen. Ron Wyden D-Ore. agreed. “I would put infrastructure spending at the top of my list” Wyden said. “I would put transportation spending way ahead” of some proposed tax credits.
Senate Budget Committee Kent Conrad D-ND also sharply criticized the hiring tax break saying that “marginal” tax breaks “in this kind of economy don’t work.”
Wyden and others have also criticized a proposal that would allow money-losing companies to get instant refunds for taxes they paid over the past five years.
Current law permits such net operating loss carryback for just two years.
Olympia J. Snowe of Maine a key Republican moderate on the committee said that while there is broad support for a stimulus package members of both parties are “grappling with what should be the mix.”
“We have to determine what are the goals of this stimulus plan” Snowe said adding that the eventual bill should ensure that workers hurt by the recession have adequate support. On the tax proposals she said the key is “making sure that they all achieve their intended purpose.”
Baucus said that a housing component will be integral to the stimulus plan and that various tax provisions might help reduce foreclosures and stabilize the market.
