Jan. 23 (Bloomberg) -- U.S. lawmakers are proposing 1930s- style investments to boost the economy, including public works projects and reviving a New Deal agency to stop housing foreclosures.
Senate Majority Leader Harry Reid, a Nevada Democrat, today called for a long-term stimulus plan to build roads, utilities, schools and housing. Representative Mark Kirk, an Illinois Republican, and Senator Christopher Dodd, a Connecticut Democrat, urged re-creating a federal agency to help homeowners refinance.
The proposals are reminiscent of the approach President Franklin Delano Roosevelt took to get the nation through the Great Depression.
House Majority Leader Steny Hoyer said both parties agree that any item in the stimulus measure must be fast-acting. ``Whatever we do is going to have a 12-month shelf life,'' he said.
Reid and New York Democratic Senator Charles Schumer said they want to look ahead to the longer term.
``We really need a one-two punch to deal with this economy,'' Schumer said.
Barry Bosworth, an economist at the Brookings Institution who worked in President Jimmy Carter's administration, called the infrastructure and housing proposals ``both very bad ideas.''
The Short Term
``If you thought this was a recession that was going to go on for years, this might be useful,'' Bosworth said. ``But nobody thinks that's the case.''
Bosworth and Peter Orszag, director of the Congressional Budget Office, said infrastructure projects are unlikely to stimulate the economy because they take too long to plan and implement.
Lawmakers are racing to enact a stimulus measure of about $150 billion to avoid a looming recession. U.S. stocks rallied today after falling for five days in a row. The Federal Reserve yesterday made an emergency cut in its benchmark overnight lending rate, lowering it three-quarters of a point to 3.5 percent.
``We should now put in place a substantial stimulus, involving temporary spending, temporary tax rebates, well- targeted to maximize impact on a timely basis,'' former Treasury Secretary Robert Rubin told the U.S. Conference of Mayors.
Reid said lawmakers are trying to get stimulus legislation to President George W. Bush within three weeks, a sprint compared with Congress's usual pace. It took until March 2002 to enact a stimulus plan after the Sept. 11, 2001, terrorist attacks.
Congressional leaders are going to bypass the normal committee process to get the bill to the House floor for a vote, Hoyer said.
Among the proposals likely to be included in the package are tax rebates of as much as $1,600, tax breaks for businesses to promote investment, an extension of unemployment insurance benefits and more money for food stamps. Lawmakers haven't decided whether to include infrastructure spending.
House Speaker Nancy Pelosi of California and House Minority Leader John Boehner met twice with Treasury Secretary Henry Paulson today to work out details and planned a third meeting tonight. Issues being considered include whether rebates would be available to workers who pay no income tax but do have Social Security and Medicare taxes deducted from their paychecks.
State of the Union
Boehner said they haven't agreed on the details and aren't sure they can get a deal in time for Bush's State of the Union speech Jan. 28.
``While we want to do this quickly, we want to do it right,'' Boehner said, echoing Bush.
``Time is of the essence,'' said Jason Furman, an economist at the Brookings Institution in Washington. ``The leaders in Congress have been talking about getting this done in 30 days,'' he said. ``As long as you keep the bill simple and focused on short-term economic stimulus and don't get into the broader debate, that's feasible.''
That may be difficult because such bills frequently turn into what are known in Washington as legislative Christmas trees, decorated with lawmakers' pet proposals.
``Most senators are going to want to add their own little amendments to this bill,'' said Pete Davis, an economist who heads Washington-based Davis Capital Investment Ideas and once worked for the Senate Budget Committee.
Reid will ``have to make a decision on whether to play ball with Republicans to get a bill out and in doing so fight off people like Mrs. Clinton,'' Davis said, referring to New York Senator Hillary Clinton, a Democratic presidential candidate.
Clinton has proposed freezing mortgage interest rates and giving $30 billion in aid to states and cities. Her Democratic presidential rival, Illinois Senator Barack Obama, has called for an immediate $250 tax cut for American workers, an extra $250 Social Security payment for senior citizens and $10 billion to help people facing foreclosure.
Democrats control both houses and may want the bill to contain home-heating and foreclosure assistance, Davis said. That may take much longer to pass and face a veto threat from the president.
On the Republican side, Representative Eric Cantor of Virginia again urged slashing the corporate tax rate to 25 percent from 35 percent.
Senator Charles Grassley, the top Republican on the tax- writing Finance Committee, said pressure for pet proposals from interest groups is inevitable. ``It happens every tax bill,'' he said. ``We've only been in town 24 hours.''