Stimulus Package 2009: Lightning Round Reactions
The Democrats in the House of Representatives introduced legislation this week containing $825 billion in new tax credits and government spending, packaged together in what they call the “American Recovery and Reinvestment Plan.” I grabbed an executive summary of the Plan from Speaker Pelosi’s website so that I could share some quick reactions to the Plan.
$10 billion for science facilities, research, and instrumentation—to focus American brainpower on solving the energy and climate challenges and finding cures and treatments for diseases. Although Pelosi promises no earmarks, this has education industry pork written all over it. On top of that, I’m afraid the global warming contingent will suck all of the life out of this money.
$6 billion to expand broadband Internet access so businesses in rural and other underserved areas can link up to the global economy. I hope that this doesn’t mean spending $10k per new broadband user.
$32 billion to transform the nation’s energy transmission, distribution, production and storage systems by allowing for a smarter and better grid to transmit renewable energy, and new advanced battery technology to power fuel-efficient, low-emissions vehicles. This I like. I want access to improved electric vehicle technology for a lot of reasons, not the least of which is to stick it to OPEC.
More than $20 billion in tax cuts for clean, renewable energy including a new enhanced tax credit for research and development focusing on smart energy conservation, energy efficiency, and renewable energy, and a multi-year extension of the production tax credit for wind, hydro, geothermal, and bioenergy. Ditto. Go to hell OPEC.
$16 billion to repair public housing and make key energy efficiency retrofits. I’m not seeing how this benefits anyone in the long run. I’d rather see those folks get out of public housing and into something better overall.
$6 billion to weatherize modest-income homes. This I like. Makes home living more affordable, helps with energy independence, puts lots of people to work.
$32 billion in transportation, of which $30 billion is for highway construction. Big time pork alert. On top of that, the road builders already control a lot of state legislatures, including ours.
$31 billion to modernize federal and other public infrastructure with investments that lead to long term energy cost savings. Sounds like we’re preparing to support more government workers. Bad idea.
$19 billion for clean water, flood control, and environmental restoration investments. Another pork alert. Now if we could use this money to move everyone out of that geographic and environmental disaster known as New Orleans, that would be OK.
$10 billion for transit and rail to reduce traffic congestion and gas consumption. You know that all of this is going to big cities in the big states. Not interested.
$41 billion to boost learning in local school districts through Title I ($13 billion), IDEA ($13 billion), a new School Modernization and Repair Program ($14 billion), and the Education Technology program ($1 billion). If we have learned anything about public education in recent years, it’s that throwing more money at public schools does not produce better students.
$79 billion in state fiscal relief to prevent cutbacks to key services, including $39 billion to local school districts and public colleges and universities and $15 billion to states as bonus grants for meeting key performance measures. Terrible idea. The taxpayers in states that have acted responsibly with their budgets get to bail out places like California, New York, and New Jersey. If that happens, they should let us all vote for the next governor of California. Arnold has to go. On top of that, college faculties hate having their performance measured so they will dilute the value of this to zero.
$25 billion to states for other high priority needs such as preventing the layoffs of public safety and other critical employees including teachers. Ditto. Pay for your own stuff California.
$21 billion in school modernization. This is too vague to understand. That means pork.
Making college more affordable through tax credits for college tuition for up to $2,500 per year of school and increasing the PELL grant by $500. I have a son in college but I’m confident that none of this money will flow to me.
Refundable tax credit of $500 per worker and $1,000 per couple, phasing-out at $200,000 for a couple. Won’t help me. In fact, I’m expecting a tax increase to pay for this.
Expand the number of families who can access the Child Tax Credit, and the Earned Income Tax Credit. The tax code is already way too complex. This just adds to it.
The Net Operating Loss Carryback provision gets cash flowing immediately to businesses during this credit crunch, allowing them to write off current losses against past profits up to 5 years (instead of just 2). Good idea – helps small business.
Bonus Depreciation provides immediate tax relief for businesses investing in new plants and equipment by speeding up depreciation deductions. As long as some of these are manufacturing plants so we can stop the flow of jobs to China, I’m OK with this.
Extending Small Business Expensing allows the doubling of the amount small businesses can immediately write off on their taxes for capital investments and for purchase of new equipment. Great idea. Small business is the lifeblood of our economy and putting resources here creates jobs in the most efficient manner. No unions involved either.
Providing businesses with a tax credit for hiring disconnected youth and veterans, and delaying withholding tax on government contractors provides small businesses with relief. If we can put more veterans into good jobs, all for it. I don’t know what a “disconnected youth” is but I’m guessing I don’t want to hire one, tax credit or not.
A First-time Homebuyer Incentive repeals the payback requirement on this tax credit, and the proposal makes grants to states for low-income housing. Homebuyer incentives don’t work. Haven’t we learned that by now? Either they can afford to buy a house or not. Incentivizing the purchase doesn’t change that.
Reinvigorating the Market for State and Local Government Bonds will get local projects moving, and provides tax credit and exempt bonds to areas hurt by the recession. This is vague but I am suspicious that it means federal guarantees of state and local bond issues. Oh Oh. More help for those pathetically bad politicians in California. Can we move the people out, start the earthquake, and just get it over with?
$20 billion for health information technology to prevent medical mistakes, provide better care to patients and introduce cost-saving efficiencies. Like it. Let’s get Google involved. They can do this faster and cheaper than anyone.
$4 billion to provide for preventative care and to evaluate the most effective health care. Vague – how will this be done?
Provide extended unemployment benefits through 2009, modernize unemployment benefits and strengthen job training. “Modernize” unemployment benefits? That sounds like “increase” benefits. Find them jobs instead.
$39 billion to help those who lose their jobs pay the cost of keeping their employer-provided health care under COBRA and providing short-term options to be covered by Medicaid. COBRA is ridiculously expensive to begin with. I don’t see this as an effective solution to the health care problem.
Increase the food stamp benefit by over 13% to help offset rising food costs. Why is this even in the Plan? It’s just an increase in welfare benefits, which should be separately debated.
$87 billion for a temporary increase in the Medicaid matching rate. Medicaid is a long term problem unrelated to this economic crisis. This is an over-sized bandage for something that should be addressed separately.
$4 billion for state and local law enforcement funding. Another bailout of incompetent spendaholic state and local politicians.
Those are my quick hits on the 2009 stimulus package. After the bill works its way through committees and senate-house conference, I will look at the bill itself for further analysis.
What are your immediate reactions to this proposed stimulus spending?
Image credit: Lynne Lancaster