The New New Deal Deferred

Congressional leaders on both sides of the aisle today expressed serious doubts about getting Obama's stimulus package ready by the time the President-Elect is sworn in on the 20th.

Representative Steny Hoyer of Maryland, the House majority leader, expressed doubt on Sunday that the Jan. 20 goal set by some for getting a stimulus package before the new president could be met.

“It’s going to be difficult to get the package together that early,” he said. Instead, he told “Fox News Sunday,” lawmakers hoped to have it to the new president by mid-February. [Like the others appearing on the day's talk shows, Mr. Hoyer made his comments before it was known that New Mexico Gov. Bill Richardson had withdrawn as the Commerce nominee.]

Senator Harry Reid of Nevada, the majority leader, was more cautious about any deadline, saying simply, “We will work this just as quickly as we can.” As to the amount of a stimulus package, he said only, “It’s whatever it takes to bring this country back on a fiscal footing that’s decent.”

But Senator Mitch McConnell of Kentucky, the minority leader, agreed with Hoyer that the Jan. 20 goal was impractical.

Mr. McConnell also expressed reservations about the ideas of extending unemployment benefits to part-time workers or expanding government-assisted health care insurance. “Those are very big systemic changes,” he told ABC’s “This Week,” and so warranted public hearings and deliberate bipartisan discussions.

And he raised a caution about the notion that as many as 20 percent of the jobs to be created by a stimulus plan might be in the public sector. “Is that a good idea?” he asked. He also urged Obama to support an immediate middle-class tax cut — possibly lowering the 25-percent rate to 15 percent — saying, “This is the sort of thing we could have bipartisan agreement on.”

It's pretty clear that the stimulus will be held hostage until the GOP and the Blue Dogs get everything they want in it. I would expect we'll still be squabbling over this in June. Considering how fast Bill Richardson was shown the door, I think Obama will happily cave into the GOP demands in the name of expediency.

In other words, the package that does pass will be useless, and Obama will be blamed for it.

[UPDATE] News leaking tonight that Obama will entice the GOP with a $300 billion tax cut.

President-elect Barack Obama and congressional Democrats are crafting a plan to offer about $300 billion in tax cuts to individuals and businesses, a move aimed at attracting Republican support for an economic-stimulus package and prodding companies to create jobs.

The size of the proposed tax cuts -- which would account for about 40% of a stimulus package that could reach $775 billion over two years -- is greater than many on both sides of the aisle in Congress had anticipated, and may make it easier to win over Republicans who have stressed that any initiative should rely relatively heavily on tax cuts rather than spending.

Which" individuals" and which "businesses" is the question, but the program appears to be aimed at the middle class.

The largest piece of the overall tax relief would involve cuts for people who pay income taxes or who claim the earned-income credit. It would serve as a down payment on the "Making Work Pay" proposal Mr. Obama outlined during his election campaign, providing a credit to offset Social Security and Medicare payroll taxes of $500 per individual or $1,000 per family.

On the campaign trail, Mr. Obama said he would phase out a similar tax-credit proposal at around $200,000 per household, but aides said they haven't settled on an income cap for the latest proposal. This part of the plan is similar to a bipartisan initiative launched in early 2008, which sent out checks worth $131 billion.

As for the business tax package, a key provision would allow companies to write off huge losses incurred last year, as well as any losses from 2009, to retroactively reduce tax bills dating back five years. In effect, this would entitle companies to receive cash from the government that they otherwise couldn't have claimed.

We'll see how this goes over. I'm betting the GOP will want to pass the tax cuts now and will block the other $475 billion in spending...in fact, I can almost guarantee it.