A House-Senate conference committee has come up with what will probably be the final version of the economic stimulus package.
From scattered media reports, it looks like the “losers” in the negotiations will be first-time homebuyers and house-flippers who won’t get much of the Senate-passed tax credit for home purchases; and state governments, who will lose most if not all of the flexible federal assistance supplied in the House bill. The AMT “patch” in the Senate bill, that temporarily protects upper-middle-class taxpayers from a big hit on Tax Day, stayed in at a price of $70 billion.
There are garbled reports as to whether conferees did or did not scale back the Obama “Make Work Pay” tax credit, the centerpiece of his campaign’s tax plan.
The one thing that is reasonably clear is that the package will be enacted. The only Republican senator even threatening to leave the reservation after the Senate passed its bill, Arlen Specter, will have a hard time rejecting the conference report unless he’s willing to get deep in the weeds of the differences from the Senate bill. And we will soon see the Obama administration and congressional Democrats thumping the tubs for quick passage of the final bill.
THURSDAY MORNING UPCATEGORY: Democratic Strategist
Politically, there’s a lot of grumbling from House Democrats–both progressives unhappy with Senate-passed cuts and Blue Dogs who don’t like unfunded tax cuts–about the AMT “patch,” which survived conference intact (see this Tom Edsall piece for an assessment of the politics of this provision). But it’s unlikely to develop into a revolt on the conference bill itself.

A very interesting discussion has broken out between two titans of the polling-analysis business, Mark Blumenthal of pollster.com and Nate Silver of fivethirtyeight.com. Nate has been exploring the theory (beloved of some Obama critics in the blogosphere) that the President’s rhetoric of bipartisanship on the economic stimulus legislation has blurred his message even as rank-and-file Republicans move decisively against him, producing net losses in his approval ratings without producing any offsetting benefits. Mark responded with alternative explanations of the slight drop in Obama’s approval ratings as entirely predictable, and suggested that a more partisan approach might have worsened them significantly.
Here’s the nut graph of Mark’s argument:

[Is there] evidence of the limits of bipartisanship? Let’s remember that Obama holds an overall approval rating that most polls now peg in the mid-sixty percent range, after winning with 52.9% of the votes cast. Doesn’t the aggregate approval rating, including approval from roughly a third of Republicans, say something about the benefits of the “bipartisan” messaging? And how will those Republican and Republican leaning independents respond to harsher partisan rhetoric from the President?

(It’s worth noting that the most recent Democracy Corps poll also found a third of Republican voters supporting Obama’s “policies and goals”).
Nate’s response adknowledges that there’s no way to definitively answer the question of Obama’s more partisan path-not-taken. But in terms of the path he did take:

[As] Mark points out, most of the decline in Obama’s approval ratings has come from Republicans, among whom he has lost a net of about 24 approval points (approval rating less disapproval rating) in two weeks. This is in spite of the fact that by roughly a 2:1 margin, Republicans think that Obama is in fact working in a bipartisan fashion, according to the latest CBS News poll.
In other words, there are quite a lot of Republicans who believe that (i) Obama is in fact governing in a bipartisan manner but (ii) disapprove of his performance anyway. Republicans can appreciate Obama’s civility — but still disagree with every piece of his agenda.

More pointedly, Nate suggests that Obama really doesn’t need rank-and-file Republican support to keep his approval ratings at a positive level. His conclusion:

[The} value of maintaining the appearance of bipartisanship does not appear to be all that high if it gets in the way of persuasion. For a week or so there during the stimulus debate, we were getting a lot of the former from the White House, but not so much of the latter.

This appears to put Nate at least generally in the camp of those who applauded the President’s speech to the House Democratic Caucus last week, and his press conference last night, as a sign that a chastened Obama has largely gotten over all the bipartisanship claptrap and is finally delivering a clear progressive message that will attract anyone who is genuinely persuadable.
As it happens, I’m among those who also have applauded Obama’s most recent speeches, but for a somewhat different reason than those articulated by most progressive bloggers. He’s distinguishing cooperation with “Republicans” (or perhaps more accurately, non-Democrats) from accomodation of conservative ideological attacks on his agenda, which in turn he’s identifying with the failed Bush policies of the past, and with business-as-usual in Washington. To put it another way, he’s seeking to identify those who are outside of (or shakily committed to) his November 4 coalition who are actually persuadable, and separating them from the GOP, whose obdurate opposition to the stimulus package is actually a good thing in terms of expanding the Democratic Party.
And this is why despite my enormous respect for Nate Silver, I think he’s got one conclusion almost backwards when he says:

While Obama certainly needs the support of a couple of Republican senators to pass his agenda, he doesn’t necessarily need the support of Republican voters.

In terms of his long-range goals, Obama’s ability to influence a significant minority of Republican voters–and even more importantly, of Republican-leaning independents–is of greater value, and comes at a lower cost, than efforts to drag more than one or two Republican senators across the line on specific legislation. Such broad support outside Washington, if it is maintained, will either create great pressure on at least some Republican members of Congress to behave themselves, or if they don’t, will help alienate potentially Republican voters from the GOP. This is what I’ve called “grassroots bipartisanship,” and looking beyond the stimulus bill to future fights over health care and other key issues, and to the next two election cycles, it remains a pretty good strategy for Obama.
That doesn’t mean that Obama has done everything right during the stimulus debate: he often didn’t make the distinction between grassroots Republicans and independents and conservative ideologues in Washington very clear; the Gregg and Daschle cabinet controversies interfered with his message and embroiled him in what looked like conventional Beltway politics; and all the attention being paid to the “centrist coalition” in the Senate also helped make the final legislation look like the produce of High Broderist deal-cutting. You can also make the case that the administration’s handling of the latest phase of the financial industry “rescue” looks dangerously a lot like the handling of the first phase by the Bush administration, which the general public strongly disliked.
But all those missteps were potentially damaging not because they involved “bipartisanship,” but because they imperiled the President’s ability to stand for a large-majority, supra-partisan coalition around the country seeking to force change on Washington.

There’s been a lot of highly critical commentary over the last few days about the thundering absence of any clear policy rationale underlying the $100 billion or so in reductions in the economic stimulus package secured by the so-called “centrist” group of senators. Today’s Washington Post op-ed by one of that group, Sen. Arlen Specter (R-PA) hasn’t exactly helped matters.
Yes, Specter cites a couple of cuts (Title I education spending, preventive health measure) and suggests that they represent types of spending that would be nice, but can’t be afforded right now. Why? Because they add up to the amount of money that Specter and company have arbitrarily decided must be cut from the legislation. It’s a classic example of circular reasoning. Or if you prefer, as Ross Douthat put it, Spector possesses a “mind incapable of thinking about policy in any terms save these: Take what the party in power wants, subtract as much money as you can without infuriating them, vote yes, and declare victory.” Similarly, Jonathan Chait observes:

It’s not like there’s some firm cap that forced the Senate to cut helpful spending programs. The cap is there because Specter decided to put it there, an act that flies in the face of the very economic theory that justifies the bill in the first place.

More specifically, unless I’ve missed it, the “centrist” group has yet to offer any sort of explanation for why aid to budget-strapped state governments took such a conspicuous hit in their “compromise.” I mean, the fiscal crises affecting nearly all of the states are real. The recession-deepening cuts they are already making in personnel, in infrastructure programs, and in direct services to low-income Americans, are very real. Do the “centrists” think there’s enough money in the package as amended to head off these highly unhelpful developments, or do they just not care? Who knows?
A cynic might observe that all of the four senators that Arlen Specter identifies as the organizers of the “centrist” coup-by-amendment–himself, Ben Nelson, Susan Collins and Joe Lieberman–happen to come from states where the governor is of the other party.
But another factor, particularly given the timing, might have been a strange little statement put out by the Republican Governors’ Association last Thursday urging Congress to reject the stimulus legislation entirely, because governors really didn’t need the money. In quotes from RGA chairman Mark Sanford of SC, Gov. Sarah Palin of AK, Gov. Rick Perry of TX, Gov. Bobby Jindal of LA, and Gov. Haley Barbour of MS, the statement complained vaguely about “strings and mandates” accompanying the bill (although much of it either increases the federal share of costs for existing programs, or, in the case of the single largest program killed by the “centrists,” made $25 billion available for absolutely anything the states wanted to do), and called instead for tax cuts. This maneuver was obviously intended to undercut a statement made a week or so earlier by the bipartisan National Governors’ Association asking Congress to act quickly on the stimulus legislation–and noting the urgency of aid to states–and scattered press reports that many Republican governors were at least privately expressing support to Obama.
Mark Sanford has been so adamant in his opposition to what he calls a “bailout” of the states that Rep. Jim Clyburn from SC secured language in the House version of the stimulus bill allowing state legislatures to bypass governors and apply for federal assistance if the governor refuses to do so.
I don’t know if the “centrist” senators or their staffs read any of this “don’t help us” stuff, but it makes about as much sense as any other explanation of the specific steps they took to reshape the stimulus legislation.

Maybe it’s the decade or so I spent working in federal-state relations for three Georgia governors, or maybe it’s just that I’m amazed at how little specific information is being provided in the MSM about the cuts made in the Nelson-Collins amendment to the Senate economic recovery/stimulus bill, but I decided to do some digging and calculations about the “$40 billion in state aid cuts” that are mentioned in most of the stories.
The original House-Senate “State Fiscal Stabilization Fund” was set at $79 billion over two years. After a small rakeoff for territories and administration, it was divided roughly into $39 billion to the states (with a pass-through to school districts for unused funds) to restore prior state education cuts; a $15 billion “state incentives grant” program keyed to progress towards state education goals (presumably those set by No Child Left Behind); and then a $25 billion fund that could literally go to any state function, including education. This last flexible fund is basically general revenue sharing, though unlike the old Nixon-era program, it all goes to the states.
The amendment killed the flexible fund entirely; cut the “state incentive grant” fund in half (to $7.5 billion); and then left the remaining $31 billion in the fund distributed to offset state education cuts. So in the state fiscal stabilization section alone, the $40 billion cut everybody’s talking about involves $25 billion in flexible money and $15 billion in education funding.
There are obviously some separate cuts in education spending, though much of it is in school construction funding that presumably doesn’t affect operating budgets, though it does reduce the stimulative effect of the overall bill.
Additionally, though I missed it earlier, the original Senate bill cut out a House-passed $1 billion temporary increase in appropriations for the Community Development Block Grant, which is the most flexible money that would have been available to local governments.
All this matters because one of the original rationales of the entire legislation was that state and local government service and personnel cuts would undercut the stimulative effect of the federal effort.
States (and indirectly, local governments) will still benefit considerably from other elements of the bill as enacted by the Senate, most notably the estimated $87 billion that would be made available through temporary federal matching rates for the Medicaid program. But if the Nelson-Collins amendment sticks through the House-Senate conference (a very good bet given the one-vote-cushion the bill seems to have in the Senate), the flexible money is gone, and education has taken a pretty big hit.
If you want to strain your eyes by staring at the bill as it now stands in the Senate, go here. And the best detailed summary of the cuts made in the original Senate bill and the Nelson-Collins amendment, the National Conference of State Legislatures has a spread-sheet in a new article on its site.

Allow me to be the umpteenth blogger to recommend for your reading pleasure the remarks that President Obama made yesterday to the House Democratic Caucus retreat.
I do not share the widespread view that these remarks represent some sort of late realization by Obama that bipartisanship is a waste of time, or that he made a mistake not just seeking to ram a Democratic-drafted stimulus package through Congress. In the pertinent passage in his speech, he is simply separating the sheep from the goats–the phony “bipartisan debate” that involves Republicans denouncing the very idea of economic stimulus and/or denouncing refundable tax cuts as “welfare,” from a genuine give-and-take”

I don’t think any of us have cornered the market on wisdom, or that do I believe that good ideas are the province of any party. The American people know that our challenges are great. They’re not expecting Democratic solutions or Republican solutions — they want American solutions. And I’ve said that same thing to the public, and I’ve said that, in a gesture of friendship and goodwill, to those who have disagreed with me on aspects of this plan.
But what I have also said is — don’t come to the table with the same tired arguments and worn ideas that helped to create this crisis. (Applause.) You know, all of us here — imperfect. And everything we do and everything I do is subject to improvement. Michelle reminds me every day how imperfect I am. (Laughter.) So I welcome this debate. But come on, we’re not — we are not going to get relief by turning back to the very same policies that for the last eight years doubled the national debt and threw our economy into a tailspin. (Applause.)
We can’t embrace the losing formula that says only tax cuts will work for every problem we face; that ignores critical challenges like our addiction to foreign oil, or the soaring cost of health care, or falling schools and crumbling bridges and roads and levees. I don’t care whether you’re driving a hybrid or an SUV — if you’re headed for a cliff, you’ve got to change direction. (Applause.) That’s what the American people called for in November, and that’s what we intend to deliver. (Applause.)
So the American people are watching. They did not send us here to get bogged down with the same old delay, the same old distractions, the same talking points, the same cable chatter.

I do agree with those who say that this is the sort of speech the President needs to be making to a broader audience, including the country as a whole.

Anybody trying to follow what’s happening in the Senate on the stimulus package today is having a bad case of vertigo. The big news yesterday seemed to be that Senate Dems didn’t have the votes to enact the stimulus legislation that was reported out of its committees, and that was roughly similar to what the House enacted. As a result, a self-designated group of “centrists”–apparently five GOPers and up to 15 Democrats–had convened under the leadership of Ben Nelson (D-NE) and Susan Collins (R-ME) to agree on modifications of the package that would reduce its cost and/or eliminate objectionable “pork.”
Now today, even as details of the Nelson-Collins “agreed-to-cuts” leaks out (TPM seems to have the first copy), Harry Reid has dramatically announced that he has the votes to cut off debate and enact a bill. The question, of course, is “what bill?”, though comments by other Democratic senators suggest that they are not including the Nelson-Collins cuts, much less the sort of larger cuts that Collins undoubtedly wants. And that in turn implies that all or nearly all of the Dems involved in the Nelson-Collins negotiations have been, or can be, convinced to vote for the bigger package (inflated to over $900 billion yesterday when the Senate approved an Isakson amendment to give big tax incentives to home-buyers), and that a couple of Republicans other than Collins (Snowe? Voinovich? Specter?) are on board as well.
If the Nelson-Collins cuts–again, a tentative list, not an agreement, since Collins is insisting on much larger cuts–is somehow in play, it’s worth looking at them in some detail. And the first thing that jumps out at you is that $39 billion of the $79 billion in proposed cuts comes from elimination of a State Fiscal Stabilization Fund.
There have already been some blog posts erroneously describing these proposed cuts as relating purely to “education.” That’s because the Department of Education administers this proposed fund. $15 billion on the chopping block is in the form of “state incentive grants” that are indeed about education (apparently aimed at rewarding states that make progress towards their education goals), but the bigger chunk, $24 billion, is the sole unrestricted money for the states in the entire stimulus package, aimed at discouraging states from laying off workers and cutting programs in a way that would undermine the very purpose of the federal legislation. To be sure, there are other funds in the stimulus package aimed at shoring up specific state-administered programs, particularly Medicaid, but the $24 billion the “centrists” are lopping off is the only truly flexible money.
I would guess that lobbyists for state and local government have figured this out and are raising holy hell about it by now. But the fact that so little is known about the composition of the Nelson-Collins group (as Chris Bowers rightly and angrily points out), and no one outside the Senate seems to know whether these negotiated cuts are in or out of what Reid intends to push on the Senate floor, is a sign of how incredibly confusing the legislative dance has become at this crucial moment.
UPCATEGORY: Democratic Strategist

In the course of about 48 hours, the conventional wisdom about the likely fate of the economic stimulus packagage has undergone a remarkable change from guarded optimism to quasi-panic. In a semi-ironic reference to the rapidly shifting winds, Mike Madden did a post at Salon yesterday entitled: “Stimulus Bill Not Dead Yet.”
The genesis of this sudden shift in perceptions is variable: the Daschle “scandal” has supposedly hurt or distracted Obama; conservatives have been all over the media with a relentless barrage of attacks on the supposed “pork” in the stimulus bill; there’s been public handwriting by Senate Democrats about their failure to nail down 60 votes; two self-styled “centrist” groups of senators from each party are kicking around major modifications to the bill that seem to get larger every minute.
Most of all, Republicans are excitedly high-fiving each other over the trends lines in Rasmussen polling on the stimulus package (see Nate Silver’s warning about the methodology!), showing things moving their way.
Perhaps it’s inevitable because of the quasi-mythical status of Team Obama as it took office, which created high expectations of instant political mastery, but still, I’ve never quite seen so much of a mood-shift based on, well, a mood-shift. Obama’s not perceived as doing well because people are saying that Obama’s not perceived as doing well. This is the sort of self-proliferating cycle of negative perceptions that can develop a ferocious energy, but can also dissipate rapidly in the fact of real-life events.
And that explains the president’s real challenge over the next few days: bringing the stimulus debate back to earth, instead of letting it be determined by who is perceived as doing a better job of spinning it.