By Kevin G. Hall and David Lightman
RISMEDIA, January 19, 2009-(MCT)-Democrats in the House of Representatives unveiled their economic stimulus plan on Thursday, proposing $275 billion in tax cuts and credits to jump-start the economy and $550 billion in spending for clean energy, road construction, social welfare programs and emergency assistance to states.
Thursday’s rollout was the first step in what’s sure to be a lively debate in the weeks ahead over the proposed $825 billion American Recovery and Reinvestment Bill of 2009, the largest stimulus measure ever.
In a related move on Thursday, the Senate voted to make the remaining $350 billion in Wall Street bailout money available when the Obama administration takes office next week. President-elect Barack Obama’s chief economic adviser, Lawrence Summers, sent a letter to Congress on Thursday promising to use up to $100 billion of that to address the national mortgage foreclosure crisis, something the Bush administration had ruled out for the bailout funds.
The stimulus plan was crafted with input from Obama, who was scheduled to appear at a factory in Ohio on Friday to talk it up.
“This plan is a significant down payment on our most urgent challenges, and it will contain the kind of strict, independent oversight that will allow the American people to hold Washington accountable for how and where their tax dollars are spent,” Obama said in a statement.
House Speaker Nancy Pelosi, D-Calif., said the stimulus package aims at “immediate job creation and continuing job creation,” but the House Republican leader, John Boehner of Ohio, took one look and vowed to fight the plan.
“Oh my God,” he said slowly as he described his immediate reaction. “I just can’t tell you how shocked I am at what we’re seeing … Everything all these agencies want to do is in here. I don’t know how this is going to stimulate the economy.”
Pelosi said Congress hopes to send the measure to Obama by mid-February.
Many mainstream economists favor a large and immediate spending plan, particularly on public works projects that create jobs. They think that government must create demand in an economy suffering from business and consumer retrenchment.
“The stimulus plan as laid out will provide a vital boost to the flagging economy. Without it, the jobless rate is headed well into the double digits-a depression in my nomenclature,” said Mark Zandi, chief economist with forecaster Moody’s Economy.com. “Stimulus is more than dollars and cents, however. It has to be passed quickly and sold well to shore up crumbling confidence.”
As promised, the legislation appears free of earmarks, the pet projects of individual lawmakers. Republicans, however, insisted that it was laden with pork since many of the spending provisions amount to a longstanding Democratic wish list that goes far beyond short-term stimulus.
The measure would provide $79 billion to state and local governments to prevent cutbacks in vital services, including $39 billion to local school districts and public colleges. It would provide $30 billion for highway construction and $19 billion for clean water, flood control and environmental restoration efforts. Another $84 billion is set aside for renewable energy production and enhancing energy efficiency.
Many of the provisions are designed to spark quick job creation in areas such as road building and health care. They also are intended to promote a shift toward “green jobs,” where construction workers retrofit and modify federal buildings, public housing and even “modest-income homes” to enhance their energy efficiency.
“They hit it over the fence,” said Phil Angelides, chairman of the Apollo Alliance, a coalition of business, environment, and labor groups pushing for federal support of clean energy technology.
In a summary of the legislation provided by House Appropriations Committee Chairman David Obey, D-Wis., however, Democrats warned that the bill won’t be a cure-all.
“The economy is in such trouble that, even with passage of this package, unemployment rates are expected to rise to between 8 and 9% this year. Without this package, we are warned that unemployment could explode to near 12 percent,” the summary said.
The Labor Department reported on Thursday that 524,000 people filed jobless claims during the week ending Jan. 10. That underscores that the economy continues to deteriorate rapidly. More than 1 million Americans lost jobs in the final two months of 2008.
The stimulus plan proposes $43 billion for increased unemployment benefits and job training.
It also includes another $39 billion to subsidize and extend the period of government-mandated health-care coverage-called Cobra-for laid-off workers. The measure would extend the 18-month limit of Cobra coverage for laid-off workers who are 55 or older.
Workers who have been employed 10 years or longer by one company would be able to retain Cobra coverage until they find a new job or become eligible for Medicare.
Rep. Charles Rangel, D-N.Y., the chairman of the tax-writing House Ways and Means Committee, rolled out the tax provisions of the stimulus plan separately. There was plenty in his bill designed to win over Republicans and business interests, including a proposal to let business deduct losses retroactively over five years. This allows companies large and small to use the tax code to bolster their balance sheets.
The tax measures also would allow businesses to more quickly write off expenses and equipment. A number of provisions would spark purchases of state and local bonds and extend tax credits for renewable energy production.
House Democrats would fulfill Obama’s promise of a tax credit for most Americans. Single filers with adjusted gross income below $75,000 would receive a $500 tax credit, while joint filers with adjusted gross below $150,000 would get back $1,000.
For employed Americans, this credit would come quickly in the form of less money deducted from their withholding taxes. Because it’s refundable, Americans without income could apply for it. The measure also proposes expanding the earned income tax credit for poorer workers and increasing the child tax credit.
Much in the package appears unrelated to short-term stimulus or long-term competitiveness. For example, it would give $1 billion to aid states in the collection of child support, another $1 billion toward preparations for the 2010 census, $4 billion to support local law enforcement and $800 million to clean up hazardous and toxic waste sites.
However meritorious such items may be, Republicans argue, they don’t stimulate the economy or significantly create jobs. Boehner singled out education funding, especially help for college students.
“Why should taxpayers have to put this money out (for people to) go to universities that have billions of dollars in (private) endowments?” he asked.
Obey, the chairman of the House committee that controls spending, said the package isn’t a spending plan in disguise, as Republicans charge.
“This is not a grand new spending program,” he said, noting that education funding directly helps cash-strapped states. “States have seen the bottom drop out of revenue projections around the country.”
Other features of the package would:
- Provide $20 billion to increase by more than 13% the food-stamp benefit.
- Give $87 billion to state governments for a temporary increase in the matching rate that the federal government pays to support their Medicaid programs for the poor and disabled.
- Designate $32 billion to “transform the nation’s energy transmission, distribution and production systems” to build a “smarter” energy grid that can use more inputs from renewable sources, such as solar, wind and alternative fuels.
- Set aside $16 billion to repair public housing and install energy efficient windows, heating and cooling units and other such improvements.
© 2009, McClatchy-Tribune Information Services.
Copyright© 2013 RISMedia, The Leader in Real Estate Information Systems and Real Estate News. All Rights Reserved. This material may not be republished without permission from RISMedia.
Content on this website is copyrighted and may not be redistributed without express written permission from RISMedia. Access to RISMedia archives and thousands of articles like this, as well as consumer real estate videos, are available through RISMedia's REsource Licensed Content Solutions. Offering the industry’s most comprehensive and affordable content packages. Click here to learn more! http://resource.rismedia.com