by Faiz Shakir, Amanda Terkel, Satyam Khanna, Matt Corley, Benjamin Armbruster, Ali Frick, and Ryan Powers
A Necessary Recovery Compromise
On Jan. 29, the House
passed
a $819 stimulus plan without a single Republican vote. On Tuesday,
after a group of senators brokered a compromise to get three
Republicans on board, the Senate passed
its own version that
would cost $838 billion. However, the
compromise slashed important provisions from the House version --
including the
elimination
of $16 billion
in funds for new school construction -- while adding tax credits that
skewed toward the wealthy. A Center for American Progress analysis
found that it would have created
9 to 12 percent fewer jobs
than the House plan, even while costing $16 billion more. After two
days of intense negotiations, the House and Senate ironed out
differences in the bill to approve a $789 billion package. Announcing
the deal yesterday, Sen. Harry Reid (D-NV) bragged that the new version
"creates
more jobs than the original
Senate bill and spends less than the original House bill." After all
the wrangling, "the
bill followed remarkably closely
to the broad outline that Obama
had painted more than a month ago." As the New York Times noted, the
bill is "the
most expansive unleashing of the
government's fiscal
firepower in the face of a recession since World War II."
NOT
PERFECT, BUT NECESSARY: Speaking
on Feb. 4, President Obama urged lawmakers to pass a swift recovery
package despite conservatives' complaints about certain provisions of
the
bill. "Let's
not make the perfect the enemy of the essential,"
Obama said. "A failure to act and to act now will turn crisis into
catastrophe and guarantee a longer recession." Indeed, Obama admitted
this week that, despite all the work on the bill, "the
plan is not perfect.
No plan is." What is clear, however, is that a bill -- even an
imperfect one -- is desperately needed, and fast. January saw the largest
monthly job loss -- nearly
600,000 -- in over three decades, and
3.6 million jobs have been lost since the beginning of the
recession. More
jobs are being shed at a far quicker pace
than during the last two
recessions, closely matching
the deep recession of the early
1970s. "This is the
most dangerous economic crisis
since the Great Depression,
and it could all too easily turn into a prolonged slump,"
Nobel-prize-winning economist Paul Krugman warned last month. Writing
this week, he emphasized, "The
American economy is on the
edge of catastrophe."
IMPROVEMENTS
OVER SENATE VERSION: The
compromise improves many aspects of the version passed in the
Senate, particularly bye expanding of "federal aid to an
array of programs aimed at the poor and jobless,
with billions of dollars for health care, unemployment insurance, food
stamps and other programs." The bill extends federal unemployment
benefits to
20 weeks, "with an additional 13 weeks for jobless in states with
particularly high unemployment," and raises weekly payments by $25.
After food stamp funding that passed the House was slashed
in the Senate version, the
compromise grants $20
billion in food stamp benefits.
Nearly $46 billion will fund
education and modernize schools, "considerably
higher than the Senate's $39 billion
total but far less than the
House's $95 billion." The bill also allocates $30 billion for smart
grid technology, advanced batteries,
and energy efficiency measures, along with $5 billion for
home weatherization and $4.5 billion to make federal buildings
more energy efficient -- closer to the House version than the Senate's.
The
new compromise also "drastically
reduced" the Senate's $15,000
tax credit for new home buyers,
"placing income limits on who could benefit and
reducing the overall cost from $35 billion to about $5 billion."
Krugman derided the tax credit as a "bonus
to affluent people who flip their houses"
and concluded that it
would have "cost a lot of money while doing nothing to help the
economy." Even better, the compromise "all
but eliminated" a big business giveaway
that would have allowed
money-losing companies to claim an estimated $67.5 billion in tax
refunds this year
and next -- a tax cut with the
least stimulative impact per
dollar, according to the Congressional Budget Office.
PROBLEMS
REMAIN: Though the
bill is an improvement over the Senate version, it is too small and
still includes non-stimulative tax breaks. The spending in the bill,
the most stimulative component, fell
from $604 billion as introduced
in the House to $637 billion when later passed by the House, falling
again to
$545 billion in the Senate-passed version. The final compromise has
only $513 billion in spending, with $276 billion in tax breaks. Some of
these tax breaks, such as the credit for new home buyers, are
particularly non-stimulative, the largest being the $70 billion tax
break to spare millions of Americans from paying the alternative
minimum tax. "Why is it in there? It has nothing to do with stimulus. It
has nothing to do with recovery,"
said Sen. Tom Harkin (D-IA). "I am not happy with it." "You
are not looking at a happy camper." The compromise slashes aid to
states to $44
billion, from the House's
$80 billion, though it's an
improvement over the $39 billion the
Senate initially allocated. But with the massive
budget shortfalls
states are facing -- California alone faces a nearly $40 billion budget
gap over the next two years -- the state aid will be unable to prevent
severe cuts in
state programs and will lead to cuts in jobs. Congressional Black
Caucus
leaders also objected to the elimination
of $4.2 billion in
neighborhood stabilization
funding removed by the Senate and asked for funding to provide
broadband Internet access to poor communities and to create more job
training programs.
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Henrietta Hughes, a homeless Florida woman who pleaded for assistance from President Obama in a town hall, has been given a place to live. Chene Thompson, the wife of Florida State Rep. Nick Thompson (R), has offered her former residence to Hughes to live in rent-free.
THINK
PROGRESS: On Darwin's 200th
birthday, only 39 percent of Americans
believe in evolution.
WONK
ROOM: Secretary of State Hillary
Clinton's trip signals refocus on
Asia.
YGLESIAS:
The effect of furloughs at the University of Maryland.
WASHINGTON
MONTHLY:
Perhaps conservatives haven't mastered Twitter yet.
MARYLAND:
Maryland General Assembly will lift Facebook ban.
WASHINGTON:
Recovery bill would boost state's renewable energy system.
RECESSION
REALITY Sen. George Voinovich
(R) and Rep. John Boehner's (R) Ohio.
"One new bureaucracy, the National Coordinator of Health Information
Technology, will monitor treatments to make sure your doctor is doing
what the federal government deems appropriate."
-- Hudson Institute's Betsy McCaughey, 2/9/09
VERSUS
"Now, we asked Betsy
McCaughey, because she's been through this
bill page by page, 'point us to the language that says that this bill
will dictate what your doctor does,' and she showed us language that
didn’t actually, specifically say that."
-- CNN's Elizabeth Cohen, 2/11/09
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