House Dems propose $825B stimulus bill

January 15, 2009 4:57:03 PM PST
House Democrats unveiled an $825 billion economic recovery bill Thursday, unprecedented in its scale and reach, that would provide an enormous infusion of public spending in hopes of kick-starting the sagging economy. The legislation - two-thirds spending and one-third tax cuts - would provide help for the poor and unemployed and hand out huge grants for local schools and state governments, among its many provisions.

Its sponsors said it would meet President-elect Barack Obama's promise of creating or preserving more than 3 million jobs.

Virtually everyone living in the United States would be affected by the plan. A $500 tax cut would reach 95 percent of workers and $1,000 for working couples. First-time home buyers purchasing homes between Jan. 1 and June 30 would get a $7,500 tax credit, and local school districts would be spared severe cuts as state and local governments budgets collapse - to the tune of $120 billion over the next two years. States would get $87 billion worth of help with their Medicaid budgets over the next two years.

But there's also money for fresh sod for the National Mall and millions of $40 coupons to help people adapt their old televisions for digital signals, raising questions about how efficient the legislation would be in creating jobs. Even bill drafters such as Appropriations Committee Chairman David Obey, D-Wis., admits that much of the money won't flow into the economy immediately.

And Obey says more may be required.

"This product may in fact undershoot the mark," Obey told reporters.

Whatever doubts there may be about how effective the plan would be, it's on a fast track through Congress in hopes of reaching Obama's desk within a month.

"It is about job creation," House Speaker Nancy Pelosi, D-Calif., said. "It is about clean, efficient energy in America to transform our economy through investments in science and technology. ... It is about modernizing our roads, bridges; education for the 21st century; tax cuts that make work pay and create jobs."

At the same time, the measure helps the poor, unemployed and people who have lost their health insurance. Food stamp allotments would increase 13 percent, or about $20 a month, while the unemployed would see their benefits extended and increased by $25 a week.

People who lost their jobs after Sept. 1, 2008, could have the government pay almost two-thirds of their health insurance premiums under the COBRA law. Poorer people who have been fired recently could get health coverage through the Medicaid program.

The measure also contains about $90 billion for traditional infrastructure projects such as road and bridge repair and construction, modernizing federal building, clean water and flood control projects, and rail and mass transit construction.

That failed to impress Terence O'Sullivan, general president of the Laborers International Union of North America, who said it "falls far short."

And AARP complained that the measure doesn't do much for senior citizens.

Pelosi seems proudest of the measure's investments in renewable energy and science, including $32 billion to upgrade the nation's electrical distribution system, more than $20 billion in tax cuts to promote the development of alternatives to oil, and billions more to make public housing, federal buildings and modest-income homes more energy efficient.

Republicans were aghast at what they saw.

"My Democratic colleagues think they can borrow and spend their way back to prosperity," said House Republican leader John Boehner of Ohio.

Obama issued a statement praising the bill, saying it would "save or create over three million jobs, provide tax relief to struggling families and businesses that create jobs, and invest in priorities like health care, education, and energy that will make America strong and competitive in the 21st century."

House committees are working on a schedule that calls for votes next week on the bill, which would then be advanced to the floor for a vote during the last week of this month.

Across the Capitol, a companion measure is expected to move along roughly the same timeline in the Senate, and congressional leaders have expressed confidence they would be able to agree on a final version by the time of a scheduled vacation coinciding with Presidents' Day.

Obama's top aides worked closely in recent days with Democrats in Congress to shape the House legislation, which generally adheres to his wishes.

At the same time, lawmakers departed significantly in one area, jettisoning as unworkable the incoming administration's plan to give a $3,000 tax credit for each new job created by private companies.

Another key priority of the new administration was preserved though. The bill calls for a tax credit of $500 per worker and $1,000 per working couple.

The measure does not include money to help middle- to upper-income taxpayers ensnared in the alternative minimum tax, which was designed originally to prevent the extremely wealthy from avoiding payment of taxes but now threatens more than 20 million tax filers.

It would have boosted the portion of the measure dedicated to tax cuts well above $300 billion, too high for both liberal and conservative Democrats. But the Senate was likely to include that provision in its version of the bill, a step that could push the overall total close to $900 billion.

Democrats promise "unprecedented accountability" with the creation of a Web site detailing how the money would be spent. They also said the bill would include none of the pet projects that lawmakers are fond of.

Still, lawmakers in the know had an idea where much of the money will be spent. For example, the Appropriations Committee says there are as many as 20 polluted Superfund sites that would get funding to begin construction. And powerful members of Congress are likely to privately lobby departments like the Pentagon to win new barracks and military child care centers for their districts.

To avoid embarrassment, the measure says specifically that the money can't "be used for any casino or other gambling establishment, aquarium, zoo, golf course or swimming pool."

Other items in the measure include funds for state and local law enforcement, extending broadband service to rural and other underserved areas and $20 billion to computerize health records, a key priority of the incoming president.


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