Democrats fear impact of economy on elections

WASHINGTON - Nearly all Democrats running for Congress from Long Island have turned against President Barack Obama's proposal to let income taxes rise on wealthier households when the Bush tax cuts expire at year's end.

And New York's U.S. senators, both Democrats up for election, also declined to endorse Obama's call for a new $50-billion stimulus for roads, railways and airports without first seeing details.

Those reactions show just how uneasy Democratic candidates feel about the impact of the economy on the midterm elections next Tuesday.

"The candidates want to show sympathy with economic anxiety without invoking a hard break with the Obama administration," said David Birdsell, Baruch College dean of political science. "And they want to be able to show a sound handling of the nation's finances."

Republican candidates, meanwhile, stand nearly united against Obama's proposals as they eye forecasts that their party might win back the House and possibly the Senate.

Both sides raise other issues in their campaigns, but all agree that nothing ranks as important to most voters as the jobless recovery from the recession and growing deficits.

Even on Long Island, unemployment is stuck at about 7 percent - less than the 9.6 percent national rate but still nearly twice what it was in 2007.

To learn what the top candidates who are facing Long Island voters think the federal government should do, Newsday asked them about three tools it has to address recessions: taxes, regulation and stimulus spending.

TaxesObama said he wants to extend the Bush tax cuts of 2001 and 2003 for "the middle class," and to let taxes rise to previous levels for individuals making more than $200,000 and families making more than $250,000 - the top 2 percent of wage earners.

That'd raise nearly $700 billion in revenue over 10 years and could lower the deficit.

But with New York's high cost of living, politicians are asking: Who's the middle class?

On Long Island, the plan would raise taxes for the top 9 percent to 14 percent of wage earners, said the Long Island Association. LIA calls for all the tax cuts to be extended.

That puts Democrats on the spot. Most of them say they're holding out for a higher threshold for "the middle class."

Rep. Gary Ackerman (D-Roslyn Heights) pegs it at $400,000. Sen. Charles Schumer puts it at $1 million.

Reps. Steve Israel (D-Dix Hills) and Carolyn McCarthy (D-Mineola) said taxes should be indexed for the cost of living. For the next couple of years, McCarthy and Howard Kudler, a Democrat challenging Rep. Peter King (R-Seaford), said they'd extend all tax cuts.

Sen. Kirsten Gillibrand and Rep. Tim Bishop (D-Southampton) say they back Obama's plan, but Bishop wants to talk to the LIA about how keeping all tax cuts affects the deficit.

Every GOP candidate backs extending the tax cuts to everyone.

"You're not going to create jobs," said Schumer's GOP rival, Jay Townsend, "by pilfering the pockets of job creators or by placing a tax on success."

Health care repealThe health care overhaul, passed earlier this year, represents a landmark attempt at regulating a sixth of the economy.

Obama and Democrats say the new law's regulations and programs will curb costs and expand access to care. The Congressional Budget Office estimated it would reduce the deficit by $143 billion over 10 years.

The GOP candidates scoff at that estimate. They say it will cost more and put burdensome mandates and taxes on people and business. They vow to repeal "Obamacare" and replace it with features such as interstate health insurance sales.

"I would vote to repeal and reform Obamacare for the same reasons I voted against it in the first place - primarily because it will result in government-run health care," said King.

All the local Democratic candidates oppose "repeal and replace."

But Bishop said he is open to medical malpractice reform. Israel said he'd work with Republicans to improve the law.

Another stimulusWashington has used stimulus spending in all but one recession since the 1960s, and Obama followed suit with a $787-billion stimulus package in February 2009.

His staff says about 70 percent of that money has been spent, and so far has created or preserved 2.7 million jobs. The GOP disputes those numbers.

But to spur more job growth, Obama is calling for another $50-billion federal stimulus.

His proposal is being met with varying degrees of ambivalence, support and opposition by candidates in both parties.

Schumer, Gillibrand and McCarthy say they're generally supportive but declined to sign on to it until they see details.

Gillibrand challenger Joe DioGuardi, a Westchester Republican, and Israel's GOP rival John Gomez took a similar stand: they might be for it with strict oversight and no earmarks.

Ackerman was gung ho.

"I'd even vote for a higher amount," he said. "More stimulus equals more jobs."

But not King. "The first stimulus didn't work," he said. "The president should learn from his mistakes - not repeat them."