Trickle-up economics

January 03, 2003

PRESIDENT BUSH is inescapably haunted by the presidency of his father. By far the most frightening specter is that of the bum economy, and George H.W. Bush's presumed indifference to it, which are believed to have cost him the White House.

Thus, George W. Bush is moving swiftly to present the newly elected Congress with a package of proposals designed to jump-start his own weak economy well before the 2004 election season gets into full swing.

At the top of his agenda Mr. Bush has wisely put an extension of jobless benefits - urging immediate action next week. He should also urge Congress to be generous. Extending a lifeline to the nearly 800,000 Americans whose benefits expired last Saturday - and some 95,000 more expected to join them each week until Congress acts - is not just good politics, it's good economics.

There is much debate about what legislation, if any, might significantly boost the economy. To some degree, the forces of supply and demand rise and fall according to cycles that policy-makers are only able to influence on the margins. Outside factors, such as uncertainty about fallout from a potential war with Iraq, can weigh heavily in the decisions to save, spend, hire or lay off.

But few dispute the clear returns from directing short-term relief to those who lose their jobs as a result of the fiscal turbulence. Giving money to people who need it to pay their bills ensures that it will be spent and multiply as it ripples through the economy. Helping workers get quickly back on their feet also saves the greater costs to society of long-term unemployment.

Chiefly at issue when the new Congress convenes Tuesday will be how much help to provide. House Republican leaders were willing to spend only $900 million in November, while the Senate was insisting on a $5 billion proposal. House Republicans are now working on a $4 billion plan, but hoping to win agreement with the Senate on something close to its $5 billion package of last year.

Bill Frist, the new Senate majority leader, will face his first challenge in trying to strike a speedy bargain with Democrats, who are now talking in the $10 billion to $17 billion range.

The president should make it easy on Mr. Frist by quickly agreeing to a plan that will extend federal benefits for those cut off last week and also provide extra federal benefits for jobless workers whose regular benefits run out within the next few months. Up to $24 billion is available for such benefits from a fund created for that purpose.

Another stalemate on this issue would likely delay action until the end of the month at least and be blamed on the Republicans who now control Congress as well as the White House.

This is no time for the president to appear unsympathetic to Americans struggling to make ends meet. As his father learned, once an impression like that is created it's very hard to erase.

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