|Details of Economic Stimulus Legislation Released||Stabilizing the Financial, Housing, and Auto sectors||Obama Pledges Entitlement Reform||One Small Victory for PAYGO||CBO Releases Report on TARP|
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Track 1- Economic Stimulus (Jan/Feb):
Track 2 - Completion of '09 Appropriations (Jan/Feb):
Track 3 - FY 2010 Budget (Feb / March / April):
Track 4 - Stabilizing the Financial, Housing, and Auto Sectors (Ongoing)
On Thursday, the House Appropriations Committee released details of the $550 billion spending portion of the economic stimulus legislation, now titled the "America Recovery and Reinvestment Bill of 2009":
Summary Document: http://appropriations.house.gov/pdf/PressSummary01-15-09.pdf
Bill Language: http://appropriations.house.gov/pdf/RecoveryBill01-15-09.pdf
Committee Report: http://appropriations.house.gov/pdf/RecoveryReport01-15-09.pdf
The House Ways & Means Committee released separately an outline of the $275 billion tax portion of the bill separately. The largest component of the tax piece is a $1000 tax credit ($500 for individuals) distributed in the form of reductions in payroll tax withholding. The tax credit would phase out for upper income taxpayers. Ways and Means Release
The Committee report contends that the net cost of the stimulus package will actually be significantly less than the $825 billion "budgeted cost" because it will "create jobs for people who would otherwise be unemployed....generate sales at companies that would otherwise not occur....(and) increase tax revenues and lower income support payments" compared to an economic scenario without any stimulus. This is the flip side of the "dynamic scoring" argument often made by proponents of tax cuts who have argued that tax cuts really cost less than their price tag when economic growth is calculated into the mix.
The Committee report also asserts that "the proposed increases in federal spending...will have nearly complete pass through to additional demand for goods and services because infrastructure projects are ready to go....federal relief for state and local operating budgets will prevent them from making cuts in spending or increases in taxes....(and) economically stressed families will increase spending by as much as their unemployment insurance, food stamp, and other financial help goes up."
However, Republican lawmakers expressed serious concerns about the package. House Appropriations Committee ranking Republican Jerry Lewis (R-CA) said in a statement, "This legislation appears to blanket government programs in spending with little thought toward real economic results (and) job creation...." House Minority Leader John Boehner (R-OH) said, "The plan releasead this morning...appears to be grounded in the flawed notion that we can simply borrow and spend our way back to prosperity....."
General provisions: the bill and report language contain no earmarks; the bill requires that formula grants must be allocated within 30 days and discretionary grants within 90 days, with the period lengthened by 30 days for new programs. The bill also provides for the redistribution of funds not obligated in a timely manner, and provides extensive transparency and oversight requirements.
Highlights of the spending portion of the stimulus bill (in billions of dollars):
Highlights of the $275 billion tax portion of the stimulus bill (in billions of dollars):
Recent developments: On January 15th, the Senate voted down a measure (42-52) to block release of the remaining $350 billion authorized by the TARP (Troubled Assets Relief Program) -- clearing the way for Treasury to commit the funds.
The Washington Budget Report is maintaining an ongoing summary of actions taken by the Treasury, the Federal Reserve, FDIC, and other agencies to stabilize the financial, housing, and auto sectors and reestablish credit flows.
In an interview with the Washington Post, President-Elect Barack Obama pledged to move forward with entitlement reforms saying the nation's long-term economic recovery cannot be achieved without bringing rapidly growing entitlement spending under control.
Obama pledged to convene in February a "fiscal responsibility summit."
He said "what we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further. We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else's."
Obama added, "This, by the way, is where there are going to be very difficult choices and issues of sacrifice and responsibility and duty. You have to have a president who is willing to spend some political capital on this. And I intend to spend some."
More specifically, Obama said "Social Security, we can solve. The big problem is Medicare, which is unsustainable....We can't solve Medicare in isolation from the broader problems of the health-care system."
In 2008, the Concord Coalition, along with representatives from The Brookings Institution, The Heritage Foundation, The American Enterprise Institute, The New America Foundation, The Progressive Policy Institute, and The Urban Institute released a nonpartisan report outlining the long-term unsustainability of current entitlement spending in a report entitled Taking Back our Fiscal Future.
See Concord Coalition comments at Concord Coalition: Blog: The (Tab)ulation
This week the House passed a bill to reauthorize and expand SCHIP (the State Children's Health Insurance Program), the cost of which is fully offset by tax increases--primarily a 61 cent per pack increase in cigarette taxes, as well as closing a small loophole for doctor-owned specialty hospitals.
Senate Finance Committee marked up its version of the SCHIP bill on Thursday, with Floor action expected next week.
In the first of a series of reports on the TARP (Troubled Asset Relief Program), CBO found that "as of the end of December, the Treasury had spent $247 billion of the first $350 billion and had plans in place for most of the rest of that half of the funds."
The report continues: "Although CBO believes that the budget should record only subsidy cost of those purchases (an estimated $64 billion through December 31), the Treasury has had to borrow the full amount disbursed, thereby increasing debt held by the public by $247 billion." (emphasis added)