Politics

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Pablo Martinez Monsivais/AP
Senate Minority leader Mitch McConnell, R-Ky., center, House Minority leader John
Boehner, R-Ohio, right, and Senate Minority Whip Jon Kyl, R-Ariz.

What Does the Final Stimulus Bill Contain?

February 13, 2009 05:30 PM
by Anne Szustek
The House of Representatives passed a version of the stimulus bill retooled by a joint Senate-House committee on Friday. But on what is the $789.2 billion package being spent?

Joint House-Senate Stimulus Bill Passes the House

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Friday afternoon the House of Representatives passed the American Recovery and Reinvestment Act in a 246-183 vote. The Senate is scheduled to vote on the stimulus package, a merged version of the bills that passed both chambers of Congress, later Friday afternoon.

President Barack Obama hopes to have the bill on his desk for signing by Monday, the public holiday of President's Day. "I don't need to tell you that we are in tough economic times," the president was quoted as saying by CNN to a group of business leaders hours before the House vote.

"We know this bill alone will not solve all of our economic woes overnight. We know that the road back to economic stability and prosperity will require hard work over time," said Rep. Ed Perlmutter, D-Colo.

But what in the 1,000-plus-page, $789.2 billion stimulus package is intended to revive the economy, and how?

According to a Wall Street Journal graphic available online as a PDF, about 38 percent of the joint House-Senate stimulus bill is to go toward tax cuts and to aid. The remaining 24 percent is to be targeted toward social spending programs.

About $115 billion is to go toward tax credits: up to $400 per individual tax filers and up to $800 per married couple in 2009 and 2010. This works out to an additional $13 per paycheck, starting in June. The tax credits phase out for individuals with annual adjusted gross incomes of $75,000-$90,000 and married couples with adjusted gross incomes of $150,000-$190,000.

Some 24 million taxpayers near the threshold for having to pay the Alternative Minimum Tax will be spared that tax burden, thanks to a $70 billion provision in the stimulus bill. There are also tranches in the stimulus to provide tax credits for higher education, first-time home buyers, new car purchases and businesses buying equipment.

The biggest slice of aid is $87 billion to go toward a temporary bump in federal funding for state Medicaid programs, followed by $40.6 billion for local school districts. Fourteen billion is to go toward credits for education expenses such as books and tuition, and $17.2 billion is for increasing student financial aid. This includes raising the maximum amount available under the Pell Grant to $5,350 in 2009 and $5,550 the following year. College work-study programs would also get some $200 million in extra funding.

Some $27 billion is to go toward extension of unemployment benefits. In addition to regular jobless aid, unemployment benefits are to be extended under the bill to a total of 20 weeks, and in 29 states with high unemployment, benefits are to be lengthened to 33 weeks. Local governments are also to receive a total of some $2 billion to acquire and refurbishment foreclosed and unoccupied real estate.

Of the social spending portions of the stimulus, $30 billion is to be allocated toward refurbishment of the electric grid, and $29 billion to go toward modernizing roadway infrastructure. Other funding for transportation infrastructure includes $8.4 billion for public transit refurbishment and $8 billion for high-speed rail. Water infrastructure, including preventative measures against flooding and environmental relief, is to receive some $18 billion in funding.

Medical funding tranches include $19 billion to hospitals and physicians to help them convert their medical records into electronic format and $8.5 billion for research at the National Institutes of Health.

The social spending portion also includes funding for home improvement efforts, including $5 billion for weatherization for low- and middle-income homeowners and $6.3 billion in energy efficiency upgrades for public and federally-supported housing.

Background: The House stimulus plan; Senate stimulus plan debate

Three centrist Republicans—Sens. Olympia Snowe and Susan Collins of Maine and Pennsylvania’s Arlen Specter—broke party lines and voted with Democrats to pass the hotly debated stimulus bill in a 61-37 vote on Tuesday.

The stimulus bill then headed to a joint congressional conference to merge this version of the bill with the version passed by the House of Representatives. A initial joint House-Senate bill was approved Wednesday.

President Barack Obama hopes to sign the bill to put it into law before Monday. 

The stimulus package that was passed by the Senate was worth some $838 billion, according to the Congressional Budget Office. It worked in extensive tax cuts, including $70 billion in fixes for the Alternative Minimum Tax, as well as incentives to buy homes and cars. It also allocated for $45 billion for infrastructure repairs—some $15 billion more than in the original House stimulus package.

The version of the stimulus package passed in the House of Representatives is worth a bit less, at $819 billion. It includes funding for states to alleviate education budgets, as well as more funding overall for those who have lost health insurance as a result of unemployment.

The stimulus package, also known as H.R. 1, passed easily in the House. But the entire body of House Republicans and 11 House Democrats voted against the bill, which President Barack Obama is backing in a bid to rejuvenate the worst U.S. economy since the Great Depression.

The House version of the stimulus package included allocations for $20 million to be spent over five years on additional food stamp benefits, and $43 billion expended over two years to bolster unemployment benefits.

Parts of the stimulus that have garnered particular criticism include funding for pursuits that are considered to fall more within the Democratic agenda, including $50 million for promotion of the arts and $335 million for education about sexually transmitted diseases.

 Telling Reuters that he planned to vote against the bill when it comes to the Senate, Sen. Jeff Sessions, R-Ala., said: “I’m convinced that they [Democrats] are seizing this as an opportunity to fund programs to a degree that they could never have funded before simply by calling it a way to create jobs.”

President Barack Obama voiced confidence during a Feb. 1 interview with NBC News’ Matt Lauer that he will be able to persuade enough congressional Republicans to lend “substantial support” to his stimulus package, now worth some $900 billion, to get money flowing through the American economy.

As cited by The New York Times’ The Caucus blog, The New York Times’ Gay Stolberg writes that the president “was not specific about what provisions he might remove from the stimulus package to entice Republicans to sign on.”

Among the early components of the House bill to get trimmed were funds geared toward public health initiatives against sexually transmitted diseases and smoking, Politico reported. Some Senate Republicans were unconvinced that the stimulus bill was trimmed of all its fat, however.

Sen. Jon Kyl, R-Ariz., voiced such concerns during the Feb. 1 “Fox News Sunday," suggesting that the stimulus bill be completely rewritten. “When I say start from scratch, what I mean is that the basic approach of this bill, we believe, is wrong,” he said.

Sen. Mitch McConnell, R-Ky., said on Feb. 1 that the bill may get voted down if what has been deemed as unnecessary expenditures don’t get cut out. “I think it may be time … for the president to kind of get a hold of these Democrats in the Senate and the House, who have rather significant majorities, and shake them a little bit and say, ‘Look, let’s do this the right way,’” McConnell was quoted as saying on the CBS News program “Face the Nation” by the Associated Press. “I can’t believe that the president isn’t embarrassed about the products that have been produced so far.”

Obama’s vision for the stimulus was a bill free of cost-heavy earmarks. But, as The Wall Street Journal put it, special-interest add-ons have been part of “the business-as-usual process for handling the legislation on Capitol Hill.”

Among the constituent-targeted plans in the Senate version of the bill was $3 billion in public transit upgrades for New York City and Chicago, as well as other cities.

Two members of Florida’s congressional delegation worked in federal workers’ compensation insurance exemptions for repairers of recreational yachts. Boat repair companies in South Florida have said that those working to fix boats used primarily for leisure are not as prone to the same workplace hazards as those who work on large craft.

Another stimulus add-on profiled by The Wall Street Journal was a House amendment added by Rep. Larry Kissell, D-N.C., stipulating that the Transportation Security Administration purchase some 100,000 employee uniforms from American textile manufacturers. Kissell’s district has a large textile industry in which the congressman formerly worked.

Republicans have also been called out for fattening the stimulus with earmarks. For example: $250 million “recommended to repair NASA facilities damaged by Hurricane Ike and to reduce the significant backlog of maintenance and repair projects at NASA facilities nationwide,” such as Houston’s Johnson Space Center, writes Politico. Sen. Kay Bailey Hutchison, R-Texas, is a member of the Senate Appropriations Committee.

Republicans are pushing for private-sector targeted tax cuts to remain the centerpiece of the stimulus; although Kyl mentioned on “Fox News Sunday” that a GOP bone of contention was a tax rebate of $500 for individuals and $1,000 for married couples, even if their income was too low to have to pay federal income tax.

His fellow Arizona Republican Sen. John McCain said on the Feb. 2 edition of CBS’ “The Early Show,” “There’s too much spending, too much unnecessary spending, not the right kind of tax cuts and no end game.”

Some argue, however, that infrastructure spending, such as for public transit systems, is a vital part of the stimulus plan, not pork. As Rep. Barney Frank, D-Mass., said on ABC News’ program “This Week,” “I never saw a tax cut fix a bridge. I never saw a tax cut give us more public transportation. The fact is, we need a mix.”

Senate Majority Whip Sen. Dick Durbin, D-Ill., pointed out Feb. 1 that tax cuts were integral to the stimulus plan, saying that $1 out of every $3 in the stimulus is to go to lowered taxes, geared toward helping lower-income households.

Durbin also stressed the urgency of the bill to prevent economic implosion: “We cannot delay this. … We can’t engage in the old political rhetoric of saying, ‘Well, maybe it could be a little bit better here and a little bit better there.’ We’ve got to pull together.”

Opinion & Analysis: Parsing the stimulus

George P. Schultz, former U.S. secretary of Labor, Treasury and State, writing in a Jan. 30 Wall Street Journal editorial, stresses the need for America to take a long-term view of stimulus funding; namely to continue health and science research, shore up benefits for the elderly and tackle the country’s energy problems. “If we roll up our sleeves today, we will emerge stronger and with confidence in our future,” writes Schultz. “A competent, sustained effort to deal effectively with long-term issues is essential to reap real benefits from any immediate stimulus to the economy.”

A Seattle Times editorial also emphasized the need for health care and social spending to keep America afloat, and “shovel-ready projects, to use Obama’s term, have to be ramped up because that is the fastest way to create jobs.” The article inferred that Senate Republicans may be less apt to vote unanimously against the stimulus than their party colleagues in the House.

If it gets passed, will the stimulus be the economic cure-all as touted? Not exactly, writes Robert L. Samuelson in Newsweek. “One reason is that some of Obama’s ‘investments,’” such as the $4.5 billion electric “smart grid,” will take a long time to roll out, he argues. Samuelson also highlights the lack of potential economy stimuli in the bill, such as a $7,500 home-buying tax credit or $1,500 to go toward the purchase of a new car or truck. “Normally, these targeted incentives would be unjustified; today, they may be necessary expedients,” writes Samuelson.

In the past, government spending sprees have done much to boost economic morale, concedes Christopher Caldwell, the senior editor of the Weekly Standard, in a Financial Times column. He also lauds Democrats for removing some potentially divisive measures in the stimulus, such as the family planning funding tranche. In the end, however, he posits that the stimulus bill could be the “Democrats’ Iraq.”

“Like Iraq, it is a long-standing partisan project that is being marketed as an ad hoc response to a national emergency. It reflects the pre-existing wishes of the party’s most powerful interest groups more than the pre-existing wishes of the country,” writes Caldwell. “Democrats are now liable to be judged by the standard they created when they abandoned the Bush administration over the Iraq war: you break it, you own it.”

Reference: Stimulus bill text; Recovery.gov; Guide to U.S. Economy

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