By David M. Herszenhorn
Published: 01-16-09
WASHINGTON — House Democrats on Thursday unveiled an $825 billion economic recovery package an expansive combination of spending and tax cuts that aims to put millions of unemployed Americans back to work and begin fulfilling President-elect Barack Obama’s ambitious agenda.
The package developed by Congressional Democrats in partnership with Mr. Obama includes huge increases in federal spending on education aid to states for Medicaid costs temporary increases in unemployment benefits and a vast array of public works projects to create jobs.
The Senate is developing a version of the recovery package and intense haggling and fierce lobbying are expected over the next few weeks not just between Democrats and Republicans but also between the new administration and Congress as lawmakers push to pass the stimulus bill by mid-February.
But the House version introduced on Thursday morning by the Appropriations Committee chairman Representative David R. Obey Democrat of Wisconsin contains the broad parameters that are expected to remain in the final product — with roughly $550 billion in spending and $275 billion in tax cuts.
The House is expected to vote on the package the week of Jan. 26.
Mr. Obey at a news conference said that without the economic recovery package Americans would face a dire recession and nationwide unemployment of 12 percent. And he said that even such a huge stimulus might not be enough to stabilize the economy.
“You have to look at this bill as not a salvation for the economy by any means” said Mr. Obey seated at his desk in the Capitol with a window behind him overlooking the Washington Monument. “It is simply the largest effort by any legislative body on the planet to try to take government action to prevent economic catastrophe and even that may be insufficient.”
Some of the largest components include $87 billion for a temporary increase in aid to states for Medicaid costs; $79 billion in aid to local school districts and public colleges to prevent cutbacks; $90 billion in infrastructure spending; and $54 billion to encourage energy production from renewable sources.
The stimulus plan which House Democrats have called the “American Recovery and Reinvestment Bill of 2009” is the centerpiece of Mr. Obama’s early agenda and it also seeks to make good on some of his signature campaign promises including an income tax cut for most Americans earning less than $200000 a year.
Under the plan individuals would receive up to $500 and families up to $1000 through a cut in payroll taxes on the first $8100 in income. The money would be delivered through paychecks as a reduction in Social Security withholdings and is intended to bolster consumer spending by giving a small lift to household pocketbooks.
Mr. Obama is expected to travel to Ohio on Friday to trumpet aspects of the plan particularly the renewable energy provisions and the aid for struggling Americans including a further extension of jobless benefits new health insurance subsidies for the unemployed and an increase in food stamps.
The release of the stimulus package came on the same day that the Senate was planning to vote on the request by Mr. Obama and President Bush for the release of the second half of the Treasury’s $700 billion financial bailout which Mr. Obama has said is crucial to protecting the imperiled credit markets.
There is substantial outrage on Capitol Hill over the Bush administration’s management of the program but even as senators began debating the request for the bailout money there were new signs of stress in the banking sector.
Some senators said that the concerns over the disintegration of Citigroup and news that Bank of America could not complete its acquisition of Merrill Lynch without further aid from the government underscored the need for lawmakers to release the additional bailout funds.
At the same time some skeptics including Senator Bob Corker Republican of Tennessee urged Mr. Obama and his aides to provide a more explicit written guarantee that the $350 billion would be used to stabilize the financial system and not to prop up individual industries.
A number of lawmakers were angered that the Bush administration used the bailout program to help General Motors and Chrysler the failing Detroit automakers.
There has been no debate however on the grave condition of the economy and while the details will be subject to intense negotiations there is general agreement on Capitol Hill about the need for a substantial government effort to address the cascade of job losses the drought of consumer spending and general anxiety.
“The economy is in a crisis not seen since the Great Depression” Mr. Obey’s staff wrote in a memo accompanying the details of the proposal. “Credit is frozen consumer purchasing power is in decline in the last four months the country has lost two million jobs and we are expected to lose another three to five million in the next year.”
The report added: “This package is the first crucial step in a concerted effort to create and save three to four million jobs jump-start our economy and begin the process of transforming it for the 21st century.”
With so much taxpayer money at stake and the unsettling reality of staggering federal debt in the years ahead Mr. Obey and other Democrats have also sought to reassure the public that the money will be well spent and that there will be careful oversight.
At his news conference Mr. Obey said that the bill would create a “Recovery Act Accountability and Transparency Board” to oversee how the money is being spent and that money allocated under the recovery bill would be tracked on a new Web site to be created by the Obama administration.
Although Mr. Obama promised to collaborate with Republicans and consider all ideas the draft proposal put forward was a Democratic plan and Republican leaders quickly criticized it.
“This is the first time Republicans and the American people have seen any specifics on the proposal Congressional Democrats intend to pass and what we’re seeing is disappointing” the Republican leader Representative John A. Boehner of Ohio said in a statement. “The plan released this morning by Congressional Democrats was developed with no Republican input and appears to be grounded in the flawed notion that we can simply borrow and spend our way back to prosperity.”
Mr. Boehner and other Republicans are planning to push for deeper and more permanent tax cuts that they say will do a better job of encouraging economic growth.
The plan by House Democrats makes long-term investments in public works and stresses their agenda including a huge increase in spending on education.
Much of the additional money for schools will be distributed under existing formulas such as Title 1 which provides federal aid for schools serving mostly impoverished students. Similarly much of the infrastructure spending will be disbursed under existing formulas such us for highway repairs.
The plan includes $90 billion in infrastructure spending including highway construction and repair water projects and environmental restoration and public transportation investments like rail lines.
It also includes $54 billion to encourage the production of energy from renewable sources and to upgrade the transmission grid as well as to weatherize public buildings and homes and raise energy efficiency. And it would provide $10 billion for science facilities and research and $6 billion for broadband service in rural areas.
In addition to the $79 billion to prevent education cuts at the state and local levels it also includes $41 billion in additional aid including $13 billion for schools serving mostly impoverished students $13 billion for disabled students $14 billion for school construction and modernization and $1 billion for technology. Another $15.6 billion would be used to increase the size of Pell grants by $500.
For the unemployed the package includes $43 billion for extended jobless benefits and retraining; $39 billion to help the unemployed keep their health coverage under the Cobra law and for other short-term coverage under Medicaid. For the poorest Americans it includes $20 billion for a temporary increase in food stamps.
The challenge for Mr. Obama and for Congress is to figure out the best ways to provide both quick and effective jolts to the economy. Tax cuts can be delivered relatively quickly but there is no guarantee that the recipients will spend the money. Infrastructure provides a substantial economic impact but construction projects even those described as “shovel ready” take time to get under way.
“The aim is to have most of this money out at the end of two years” Mr. Obey said but he acknowledged that experts had provided differing projections about how quickly the money could be spent.
As Mr. Obey described the recovery package for reporters crowded into his office he fidgeted with a yellow No. 2 pencil the intricacies of the $825 billion package scratched out on a notepad in front of him. There was another yellow pencil in the breast pocket of his suit jacket. Attached to a large gilded mirror on the wall is a sign with an unattributed quote: “What do you want me to do for someone besides yourself that is more important than whatever it is you want me to do for you?”
With so much taxpayer money at stake and the unsettling reality of staggering federal debt in the years ahead Mr. Obey and other Democrats have also sought to reassure the public that the money will be well spent and that there will be careful oversight.
Related
At his news conference Mr. Obey said that the bill would create a “Recovery Act Accountability and Transparency Board” to oversee how the money is being spent and that money allocated under the recovery bill would be tracked on a new Web site to be created by the Obama administration.
Although Mr. Obama promised to collaborate with Republicans and consider all ideas the draft proposal put forward was a Democratic plan and Republican leaders quickly criticized it.
“This is the first time Republicans and the American people have seen any specifics on the proposal Congressional Democrats intend to pass and what we’re seeing is disappointing” the Republican leader Representative John A. Boehner of Ohio said in a statement. “The plan released this morning by Congressional Democrats was developed with no Republican input and appears to be grounded in the flawed notion that we can simply borrow and spend our way back to prosperity.”
Mr. Boehner and other Republicans are planning to push for deeper and more permanent tax cuts that they say will do a better job of encouraging economic growth.
The plan by House Democrats makes long-term investments in public works and stresses their agenda including a huge increase in spending on education.
Much of the additional money for schools will be distributed under existing formulas such as Title 1 which provides federal aid for schools serving mostly impoverished students. Similarly much of the infrastructure spending will be disbursed under existing formulas such us for highway repairs.
The plan includes $90 billion in infrastructure spending including highway construction and repair water projects and environmental restoration and public transportation investments like rail lines.
It also includes $54 billion to encourage the production of energy from renewable sources and to upgrade the transmission grid as well as to weatherize public buildings and homes and raise energy efficiency. And it would provide $10 billion for science facilities and research and $6 billion for broadband service in rural areas.
In addition to the $79 billion to prevent education cuts at the state and local levels it also includes $41 billion in additional aid including $13 billion for schools serving mostly impoverished students $13 billion for disabled students $14 billion for school construction and modernization and $1 billion for technology. Another $15.6 billion would be used to increase the size of Pell grants by $500.
For the unemployed the package includes $43 billion for extended jobless benefits and retraining; $39 billion to help the unemployed keep their health coverage under the Cobra law and for other short-term coverage under Medicaid. For the poorest Americans it includes $20 billion for a temporary increase in food stamps.
The challenge for Mr. Obama and for Congress is to figure out the best ways to provide both quick and effective jolts to the economy. Tax cuts can be delivered relatively quickly but there is no guarantee that the recipients will spend the money. Infrastructure provides a substantial economic impact but construction projects even those described as “shovel ready” take time to get under way.
“The aim is to have most of this money out at the end of two years” Mr. Obey said but he acknowledged that experts had provided differing projections about how quickly the money could be spent.
As Mr. Obey described the recovery package for reporters crowded into his office he fidgeted with a yellow No. 2 pencil the intricacies of the $825 billion package scratched out on a notepad in front of him. There was another yellow pencil in the breast pocket of his suit jacket. Attached to a large gilded mirror on the wall is a sign with an unattributed quote: “What do you want me to do for someone besides yourself that is more important than whatever it is you want me to do for you?”
