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With elections looming, Congress is unlikely to act soon

(The following story by Jonathan Weisman appeared on the Wall Street Journal website on September 8, 2010.)

NEW YORK — Congress is unlikely to quickly pass President BarackObama's latest proposals to jump-start the economy, reflecting the president's weakened political position and a bruising election just two months away.

Mr. Obama travels to Cleveland to deliver a key-note economic speech Wednesday that will outline plans to enhance and permanently extend the research and experimentation tax credit, allow businesses to write 100% of their investments off their taxes through 2011, and pump another $50 billion of infrastructure spending into the economic bloodstream.

Businesses say the tax proposals are helpful but no substitute for what they really want: broad-based changes to the corporate tax code and an extension of President George W. Bush's tax cuts, which expire in January. Republicans have criticized the proposals as a Stimulus II, while urging Democrats running for office to reject it.

Democrats, for their part, have quietly voiced disappointment that the White House didn't propose other, more populist proposals, such as a payroll tax holiday. Republicans noted that top Democratic leaders and embattled candidates were virtually silent on the proposals.

"Where are the candidates?" asked Don Stewart, spokesman for Senate Minority Leader Mitch McConnell. "If this is a re-election effort, shouldn't the candidates be out there?"

White House officials say the initiatives put Republicans in the position of embracing or rejecting proposals that should have bipartisan appeal: roads, railways and runways, and business-investment incentives.

Pennsylvania Democratic Gov. Ed Rendell said the proposals were lifted "right out of the Republican playbook," and if the GOP rejects them, they will underscore the Democratic case that they are obstructing the recovery for political gain.

Mr. Rendell warned that if the proposals couldn't change the political climate, there was little Mr. Obama could do to avert sweeping defeats in the November. "You're not going to convince the people who aren't listening, and if they're not listening, you might as well have the election tomorrow," he said.

Mr. Rendell added he believed Americans really listen to campaigns only after Labor Day.

The White House has worked hard to gain political traction ahead of the Cleveland speech. Mr. Obama called Sen. George Voinovich (R., Ohio) over the weekend to discuss the infrastructure plan. The White House's business liaison office reached out to the Business Roundtable to discuss the business-investment and research-and-development proposals.

Some legislative discussions have begun. The Democrats could tack a version of an R&D extension or business-investment incentive onto legislation that extends the Bush tax cuts for the middle class, but not to households earning more than $250,000.

But White House officials, business advocates and Republicans were skeptical the measures would pass in the three or four weeks Congress has left before members leave Washington for the fall campaigns. House Democratic leadership aides said they did not want to move forward without assurance that the Senate could pass the measures. And Senate aides gave no such promises.

"The only way we can get anything done is with cooperation of Republicans, and that's been in short supply in recent months," said Jim Manley, spokesman for Senate Majority Leader Harry Reid (D., Nev.).

Republicans showed no fear that Mr. Obama had gained the upper hand politically. Rob Portman, a former Bush White House budget director running for the Senate, challenged his Democratic opponent, Ohio Lt. Gov. Lee Fisher, to say whether he supports "a second big government 'stimulus.' "

The National Republican Congressional Committee, which is responsible for electing Republicans to the House, dashed off a release to 101 targeted House Democrats, blaring, "First stimulus was a failure. Now House Dems want to hit the accelerator on more wasteful spending."

The White House economic "message has been reduced to political satire in many ways. The president lacks credibility," said NRCC spokesman Ken Spain.

Business lobbyists who might have carried the ball for the White House were tepid. Bruce Josten, the chief lobbyist for the U.S. Chamber of Commerce, said that businesses were not going to invest in new plants and equipment if managers saw no consumer demand for their products, no matter how generous the tax incentive was.

Mr. Josten added that because Democrats insisted on offsetting the cost to the Treasury of any tax cuts, the Chamber could not back any White House proposal before seeing how it would be paid for.

Wednesday, September 8, 2010

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