ECONOMY

Senate Dems unhappy with level of energy spending in Obama stimulus plan

Senate Democrats yesterday called on President-elect Barack Obama to increase the amount of energy-related spending and tax breaks in the planned economic stimulus bill.

In a closed-door meeting with Obama economic adviser Larry Summers and senior adviser David Axelrod, several Senate Democrats said they were unhappy with the proportion of the stimulus dollars and tax breaks directed toward energy projects. At the same time, several members questioned whether some of the tax breaks Obama is seeking would be effective in creating jobs and spurring economic recovery.

"Energy is way under-represented here in the package that has been discussed," said Sen. Kent Conrad (D-N.D.) after the meeting. "We need to do much more in reducing our dependence on foreign energy and that way lies enormous job creation for the country as well."

The meeting came hours after Obama delivered an address in which he touted alternative energy development and energy efficiency as a major part of his effort to pull the country out of the economic crisis. He vowed to double the production of alternative energy during the next three years, retrofit more than 75 percent of federal buildings and 2 million homes to make them more energy efficient and to build a "smart" electricity grid.

But the president-elect did not attach dollar amounts to his energy proposals and upon seeing some of the details of the proposal, Conrad said that it was obvious that more spending and tax incentives needed to be directed to those areas.

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"Clearly they heard that there are perhaps changes that need to be made to made to get greater confidence that this package is going to be fully effective and that it is going to give the biggest bang for the buck, and that energy is right at the top of the list," Conrad said.

According to Conrad, the president-elect's team said they were currently eyeing $10 billion worth of energy-related tax incentives in the package, out of an expected $300 billion in tax provisions in the bill overall. "Ten billion on a $300 billion dollar package when energy is the number one opportunity for us in terms of strengthening our long-term economic position?" Conrad asked.

While specific energy tax provisions that will be included in the stimulus remain unclear, renewable energy and efficiency advocates are pressing for a range of provisions including extending the production tax credit for wind power that expires at the end of this year and extending and expanding credits for home and building efficiency.

Tax breaks or infrastructure programs?

The comments from Conrad and several others mark the first public fissure between the Obama team and congressional Democrats over the stimulus bill and may hint of a looming tug-of-war between the White House and Capitol Hill over the exact provisions of the legislation.

"I'm very confident that some adjustments are going to be made," said Sen. John Kerry (D-Mass.). "We positively, absolutely in my judgment, need to spend more on energy and I made that point and will continue to make that point."

Last year, Congress approved and President George W. Bush signed a wide-ranging, roughly $17 billion energy tax package that was grafted onto the $700 billion Wall Street rescue package.

Lawmakers said there were no discussions in the meeting about specific energy projects or tax provisions, only a broad expectation from several that there needed to be a change in the ratio spent on energy and infrastructure investment versus tax breaks for individuals and businesses.

Senate Majority Whip Dick Durbin (D-Ill.) said that the broad outline provided by the Obama administration called for a stimulus bill where 40 percent of the amount is directed toward tax cuts, 40 percent is direct investment in various initiatives and 20 percent is money handed out to the states.

But some questioned whether the tax cuts in the plan would be as helpful to creating jobs as construction projects and other more direct spending plans.

"The focus ought to be on roads, bridges and transportation systems," said Sen. Ron Wyden (D-Ore.). Referring to the tax rebate stimulus approved by Congress last year, Wyden said, "The idea of going forward with an approach that to some extent resembles stimulus one, where you give people a few hundred bucks, does not strike me as a good way to go."

Wyden added that some GOP lawmakers have also signaled that they would like to see a package that leans more heavily on the kind of direct investment also pushed by Senate Democrats. "There would be bipartisan support for retooling the package to skew it more toward energy investment," he said.

Senate Democratic leaders tried to downplay the apparent split between much of their caucus and president-elect's team, saying the discussions are part of the standard give-and-take that takes place between the executive and legislative branches.

"There's not a violent reaction against it, but you have people saying, 'Would you consider this as an option?'" Durbin said. "This is part of the conversation you expect at this stage."

Senate Majority Leader Harry Reid (D-Nev.) made it clear that he did not believe Obama officials were unwilling to change their proposal to alleviate some of the concerns raised by members of Congress.

"There is nothing that is written in stone," Reid said. "Barack Obama has never said he will give us this bill, and that's what we'll take."

Indeed, even Democrats that were critical of the proposals said the meeting was constructive. "This was a very, very good meeting, a very substantive meeting," Conrad said. "They clearly got the message, and Mr. Summers summed up by saying 'message received loud and clear.'"

Others, however, when asked about the administration's reaction to Democrats' concerns said they were unsure if their recommendations would be taken to heart.

"I don't know, I'm a little concerned by the way Mr. Summers and others are going at this in that to me it still looks like a little bit of 'trickle down,'" said Sen. Tom Harkin (D-Iowa). "A number of people in there said we have to have programs that actually create jobs and put people to work.

"And quite frankly what I'm hearing from Mr. Summers and others is that they've got a different view, a different approach," Harkin said.

Senate Democrats did leave the meeting saying that they were on the same page with the Obama administration on the sense of urgency surrounding the bill with several adding that they believed they could get the bill to the president's desk by mid-February.

House Speaker Nancy Pelosi (D-Calif.) yesterday also set a deadline of mid-February to complete the stimulus bill, vowing to keep the House in session through the Presidents' Day recess if the legislation is not finished. A Pelosi aide said the tentative schedule calls for committee markups to take place the week of Jan. 19, with floor action likely the following week.

Senate leaders have been less willing to put in place a specific timeframe, though Baucus told reporters yesterday that he expected the relevant Senate committees -- Finance and Appropriations -- to also mark up their portions of the bill during the week of Jan. 19.

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