Subject: hill stimulus bill update : 11 / 02 / 01
based on meetings in washington and new york through yesterday and updates early this morning , here is what we know on the stimulus bill debate . the prominence of the is debate will increase and intensify throughout the month and is quickly shaping up to be a critical measure of post - 9 / 11 bipartisanship and a prelude to the 2002 mid - term elections . contact brendan fitzsimmons at x 5 - 4763 for follow - up .
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hill stimulus bill update : 11 / 02 / 01
summary
timing : bush wants a stimulus bill by thanksgiving , but that is looking highly unlikely without a major ( and unlikely ) capitulation on the hill ; even a bill by christmas is less likely than it was just a few days ago , meaning any rebate checks wouldn ' t come until well into ' 02 ; and there remains a risk that nothing is done this year
next week - fed and senate : sources report that pessimism concerning passage of fiscal stimulus increases the likelihood that greenspan pushes for a 50 bp cut on tuesday . expect a partisan mark - up from baucus ' senate fin . committee next tuesday or wednesday , setting the stage for stalemate and very public political recriminations .
data pressure : it is too early to tell whether the massive jump in unemployment rate to 5 . 4 % will change the atmospherics surrounding this week ' s talks , but before the number it was clear that the extreme partisanship will delay passage and make the final cost of the package more expensive as all sides try to " buy - in " votes during final conference committee negotiations
conference outlook : if a compromise bill is reached , expect final numbers to run higher than $ 100 b as more of each bill gets into the final conference bill
report
hill and white house
bush ' s speech on wednesday was the opening move in the white house ' s plan to pressure for a compromise stimulus bill ; but wh message and the republican chorus that followed have only provoked stronger resistance from daschle and the dems on core healthcare , unemployment provisions
yesterday ' s white house discussions with senators baucus and grassley went nowhere . the white house is now refusing to meet with them prior to senate action . senate finance committee leadership is planning for a " highly partisan " session on tuesday or wednesday next week in attempt to pass the bill that senator baucus drafted and released last week .
bush must spend more political capital and give stimulus greater visibility , priority in order to get house and senate compromise ; expect treasury to join the fray against daschle warning of minimal stimulus and maximum danger for future budgets well into the future
daschle is digging - in ( and with senate finance chair baucus still standing loyal ) , buoyed by focus groups and polling showing that standing up to the house republicans ' tax - cut weighted bill is a winning message
the senate bill has several elements that are strongly rejected by the white house and the house republicans including the extended health care facilities under cobra . this was the key to administration attempts to find a compromise and that has now failed .
although there may be legislation passed by the senate finance committee during next week ' s mark - up , it will be passed on an exceptionally rigid party line vote and the entrenched positions on all sides will be further reinforced .
macroeconomy
fed tuesday : treasury ' s announced plans to end 30 yr bonds and today ' s employment report will strengthen pricing of 50 bp on tuesday and a further 25 bp december 11 and will continue to direct attention back to the back and forth between the hill and wh . after fed meeting focus will be on o ' neill and lindsey within the administration
waiting on washington : heightened sense of immediacy as us macro data continues to confirm recession : with a $ 100 b stimulus bill already priced in to the market , delay or failure in passing a bill could have strong negative effects . this week ' s raft of weak data , particularly today ' s confirmed weak employment report , will increase the pressure for movement on a stimulus bill