Pelosi: Economic stimulus tops '09 agenda

By Richard Cowan

WASHINGTON (Reuters) - Passage of a broad economic stimulus bill, including tax cuts, will be a top priority of the next Congress when it convenes in January, House of Representatives Speaker Nancy Pelosi said on Friday.

"Our focus for the first week of the new Congress will be to ... introduce a strong recovery package to create jobs" and to shore up confidence in the ailing economy, Pelosi told reporters.

While Pelosi did not give details, it likely would include tax cuts for the middle class and billions of dollars for job-creating construction projects.

Fears over the U.S. economy were a central issue in this year's congressional and presidential election campaigns. Now that they will control both Congress and the White House for at least the next two years, Democrats want to deliver early on campaign promises to help the economy.

Speaking at the end of a weeklong legislative session that failed to produce a new government bailout of the U.S. auto industry, Pelosi said the U.S. economy needed an economic stimulus bill "much bigger" than the $61 billion measure that passed the House in September, only to die in the Senate.

In months past, Pelosi, a California Democrat, has talked about needing as much as $150 billion in new economic stimulus investments beyond the $168 billion enacted earlier this year.

Pelosi also said tax cuts would be part of her bill. President-elect Barack Obama, who takes office on January 20, along with other leading Democrats, has supported a middle-class tax cut.

Further down the road, Obama and his fellow Democrats in Congress are going to have to confront a thornier question: whether to let tax cuts for the wealthy expire at the end of 2010. Those were an essential part of President George W. Bush's tax policy early in his administration.

BILLIONS FOR BUILDING

The first economic stimulus measure, which Bush worked on with Congress in January and February, mostly provided tax rebate checks to individuals and families. Temporary tax breaks for businesses also were included.

While there is evidence that measure helped the economy briefly, more recently there have been signs of a serious economic slowdown taking hold: significant job losses, turmoil in the financial industry, U.S. automakers facing bankruptcy and home foreclosures at a brisk pace.

Besides middle-class tax cuts, the Democrats' next economic stimulus bill is expected to spend billions of dollars on construction projects -- road, bridge and mass transit improvements -- that would create jobs. Another chunk of money likely would be channeled to states, which are facing mounting health care and other costs amid falling revenues.

The Bush administration and Republicans in Congress have criticized these ideas, saying such legislation would add significantly to the mounting U.S. debt and not effectively stimulate the economy.

Instead, they have talked about corporate tax cut changes and focusing on making the United States more self-sufficient in energy.

Pelosi tried to tamp down any expectations that passage of a new stimulus bill would solve the nation's economic problems.