New day on Capitol Hill

Obama calls for public works

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No foreclosures for 90 days

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NEW YORK (CNNMoney.com) -- Spend tens if not hundreds of billions to boost the economy. Pass a law giving homeowners more leverage over lenders. Do more to address the growing ranks of unemployed workers.

There's a new day for economic policy in Washington.

The Democrats not only took back the White House -- they gained a stronger hand in both chambers of Congress. As a result, in the 10 weeks before President-elect Barack Obama takes office and the months that follow, legislative leaders will likely revive a series of measures that failed to gain traction in the past year.

At the top of the agenda: stimulating the flagging economy.

In September, the Democratic-led House passed a $61 billion package that included money for infrastructure spending, an extension of unemployment insurance and an increase in food stamp payments. But it never passed the Senate, which could choose to take up the issue again during its lame-duck session on Nov. 17.

House Speaker Nancy Pelosi, D-Calif., said on Wednesday that "the need for more [stimulus] has grown" as the economy's problems have worsened.

Pelosi told reporters she's "in communication with the White House" about the need for measures to boost the economy and help unemployed workers and low-income families. "However, if we can't get the administration interested in doing more ... the least we can do is the package that we have put forth."

President Bush, who could veto any measure passed by a lame-duck Congress, isn't on board with some of the measures proposed to date.

Congressional Democrats, if they sense a veto fight in the offing, are more likely to wait until January when Obama takes office and their increased majorities in the House and Senate take hold. Pelosi indicated the House would only convene in a lame-duck session if it had a bill to vote on that Bush would sign.

Obama is on board with doing more. He has called for lawmakers to require that financial institutions getting money from the government's $700 billion financial rescue package call a 90-day moratorium on foreclosures. He has also called for extending unemployment benefits and offering a $3,000-per-hire tax credit for companies creating jobs in the United States.

Analysts at the Stanford Group, a policy research firm, expect that all three of those measures will be put into effect within the first few months of an Obama administration.

Other candidates for stimulus, said Jaret Seiberg, a financial services analyst at Stanford, are a tax rebate for home buyers worth up to $15,000, which is double the $7,500 one currently in place; and at least an extension of the higher limits on loans that mortgage giants Fannie Mae and Freddie Mac may guarantee in high-cost housing markets. That limit -- $729,750 -- is set to expire on Dec. 31.

Within the next year, Seiberg said the chances have improved for passage of mortgage bankruptcy reform since it is supported by Obama and many in the newly enlarged Democratic majority in the House and Senate.

The measure would allow bankruptcy judges to reduce the mortgage principal or interest on a bankruptcy filer's primary residence. Currently judges may only do so for second homes and commercial properties.

Proponents say such a change would encourage lenders to modify more loans for troubled borrowers before they file for bankruptcy rather than risk a judge's intervention. Opponents say the change could cause a rise in interest rates because mortgage investors would price in the risk of new loan terms.

Another area Pelosi said is likely to be on the agenda: an expansion of the State Children's Health Insurance Program that President Bush vetoed earlier in the year.

And within the next two years, lawmakers are expected to pursue regulatory restructuring of the banking and finance industries, with Democrats likely to resurrect their proposals for federal laws governing mortgage underwriting. Such bills would require that lenders "have a reasonable belief" that the borrowers they loan money to can afford the loans, Seiberg said. And under the legislation mortgage securitizers would be held liable if they don't hold lenders feet to the fire on that.

Democratic control of the White House and strong majorities in both chambers of the legislature will not guarantee success for their plans.

For starters, there's the matter of money - not having enough of it to do all the majority party would like to do.

Pelosi seemed to acknowledge as much. "Many of our options have been diminished because of the downturn in the economy in the last couple of months," she said. "The revenue foregone because of the financial crisis has changed the budget projections."

And even before the fiscal constraints imposed by the financial crisis, there were heated debates both between and within the parties about whether and how to pay for new spending or new tax cuts.

One Washington expert said it will be difficult for lawmakers and Obama to enact measures to address the economic crisis and lower taxes at the same time.

"Given the swelling budget deficit, the reality is that tax increases or spending cuts will be necessary to offset at least some of the cost of tax relief," wrote Clint Stretch, Deloitte's managing principal of tax policy in a post-election report. "This will require lawmakers to cast votes that could prove unpopular with their constituents."