February 11, 2009
The Senate bill provides $40 billion less to cash-strapped states to bolster their spending on education, including help to avoid classroom cuts, and $16 billion less to renovate and rebuild schools. It also cuts food stamps and aid to the unemployed.
See Paul Krugman's take in the NY Times.
See Dean Baker's critique, "Fewer Jobs: Stimulus on the Cheap."
The Senate version adds three costly tax breaks:
- Extends the alternative minimum tax "patch" through 2009 at a cost of $70 billion; this mostly benefits upper-income people.
- A $11.5 billion measure to encourage the purchase of autos by allowing buyers to write-off local sales taxes and interest on loans.
- A $35.5 billion measure would create a new tax credit equal to 10% of a primary-home purchase, up to $15,000, which would primarily benefit wealthier people.
Where the money goes:
In the stimulus plan before the Senate, much of the billions in spending is divided among these areas: $142 billion for education, $111 billion for health care, $90 billion for infrastructure, $72 billion for aid and benefits, $54 billion for energy, $16 billion for science and technology and $13 billion for housing. The tax cuts amount to about $350 billion.
The White House released a state by state chart of how many jobs the economic recovery plan will create in each state.
The official cost estimates of the Congressional Budget Office show that 85 percent of the effects of the House bill, and 94 percent of the effects of the Senate bill, would occur during the 2009 - 2011 period - when the CBO says the nation's economic output will be far below its potential and fiscal stimulus thus would be beneficial.
Ways the Economic Recovery bill could get worse:
Senate Republicans want less spending and more tax cuts in the bill. A Center for Economic and Policy Research report states "...as tax cuts are substituted for government spending, there will be fewer jobs created by the stimulus and that African Americans and Hispanics will feel this effect disproportionately. Insofar as corporate tax cuts are substituted for spending, the impact of a given amount of stimulus will be only one-fifth as great. This sort of substitution could lead to considerably higher rates of unemployment for African Americans and Hispanics.
Senators who vote against the stimulus are opposing $900-1000 in tax cuts for families with children”¨in most states. A Citizens for Tax Justice report states about half of the tax cut portion of the bill consists of a refundable "Making Work Pay Credit" worth up to $500 for most working people or $1,000 for married couple- basically credits on payroll taxes that people pay. The tax cuts in the stimulus bill are much more distributed towards lower and middle income people than the Bush tax cuts were.
The House Republicans only want to give this tax cut to those who pay income taxes, which would leave out 35 percent of Americans who need it the most and would spend it quickly.
Sen. Demint's plan swipes tax benefits from families, teachers and college students. It costs $3.1 trillion (three times as much as Obama's), would give a $320,000 tax cut to the average CEO and nothing to a worker making the minimum wage, and would take away deductions from 45 million families who pay state and local taxes, 10 million families with steep medical expenses, 7.5 million families paying off college loans, and 3.4 million teachers who buy supplies for their students. It would gut the estate tax.
Ways the Economic Recovery bill could be better:
- Don't extend the alternative minimum tax "patch" through 2009; it makes no sense as economic stimulus. It costs $70 Billion for one year.
- Don't give Verizon $1.6 billion in tax cuts without generating a single new job. Money originally intended to encourage companies to bring high speed internet to underserved low-income and rural communities has turned into a billion dollar giveaway to big telecom.