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Blue Dogs Sniff at Fiscal Stimulus

A Commentary by Froma Harrop

Tuesday, January 22, 2008

WASHINGTON, D.C. -- You've seen the hound who sits out front and emits a low growl when people walk by. He's saying, "You can pass, but don't try any funny stuff."

The Blue Dog Democrats are making similar noises toward proposals to goose the economy. A coalition of 47 moderate-to-conservative House Democrats, the Blue Dogs abhor budget deficits. They are the chief enforcers of PAYGO, the noble rule revived by the Democratic majority. PAYGO requires that new spending and tax cuts be offset by new revenues.

But now recession looms, and ideas to simulate the economy are scampering down the halls of Congress. They include tax rebates, hikes in food stamps and other ways to quickly inject cash into the economy. Almost everyone agrees that's something's needed -- and a stimulus would not be much of one if it had to be immediately paid for.

What's a Blue Dog to do? I asked two of the coalition's leaders -- Rep. Mike Ross of Arkansas and Florida Rep. Allen Boyd. They say a stimulus package must pass. But they're on high alert for the funny stuff.

"It should be temporary," Ross told me in his office, joined by Boyd. "It should be targeted, and it should be paid for over five years." It should not get "larded up." And, yes, lobbyists are now swarming around what could become a $150 billion bag of money.

"Our role in this," Boyd added, "no matter how we come on this in terms of substantive policy, is to be the fiscal-responsibility police."

And so how could this be paid for in later years? Ross says the House Ways and Means Committee has some good ideas left over from the failed effort to offset the one-year patch of the Alternative Minimum Tax.

They include seeming no-brainers, such as closing some loopholes on offshore tax havens and taxing hedge fund managers at the same rates their chauffeurs pay. Since Democrats took Congress, the AMT legislation has been the only fall from PAYGO grace. The Blue Dogs still howl at it.

Ross faults Senate Republicans for their inability to make the AMT fix revenue neutral. "It was all about the tax cuts that would expire in 2010," he said. "They knew that if they had to pay for this one, they'd have to pay for that one."

The Blue Dogs irritate some on the left, who complain that they hurt the Democrats' ability to enact their social priorities. The Dogs do not apologize for their fiscal discipline, seeing the national debt as a drag on all Americans. And they insist that budget watchdogs can also serve the interests of ordinary Americans.

For example, Ross wants the stimulus money directed at lower- and middle-income people, many of whom are struggling. "They've got a car that's broken, they've got a washing machine that doesn't work," he said. "They get a $300 check in the mail -- they're going to get these things fixed. That's how you stimulate the economy."

Boyd blames the Bush administration for turning the American economy into a "pure mess." The president, he said, "led people to believe that they can have all the spending programs they want and have tax cuts and go to war, and we can borrow the money from China, and everything's going to be OK."

Ross happily reports that House Speaker Nancy Pelosi is on the coalition's side. Fiscal restraint is good for the country and also for the Democrats. After the 2006 election, the Blue Dog den gained nine new pups. Eight had just taken seats from Republicans.

Given the economic emergency, the Blue Dogs will let the stimulus package pass -- but not before they give it a good sniff.

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