|Stimulus Bill: Spending Provisions||Stimulus Bill: Tax Cuts||Questions Raised About Stimulus Package||Fiscal Policy Experts Call for a "Budget We Can Believe In"||Stabilizing the Financial, Housing, and Auto sectors|
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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)
Last Wednesday (Jan. 21) the House Appropriations Committee passed the spending portion of the "American Recovery and Reinvestment" bill on a vote of 35-22.
The Senate Appropriations Committee will mark up its piece of the stimulus bill today (Jan. 27). Compared to the House Appropriations Committee bill, the Senate spending package would provide more money for Veterans medical and broadband, but less for highway construction and the electric grid. Senate Appropriations Committee stimulus provisions
The full House is scheduled to vote on the complete stimulus legislation (discretionary spending, entitlement spending, and tax provisions) this Wednesday, Jan. 28. (See the article below for details on the tax package). House Rules Comm. Web Site on Stimulus Package
Following is a broad overview of funds that would be appropriated under the House bill (in billions of $):
Last Thursday, January 22, the House Ways & Means Committee on a party-line 24-13 vote approved the $275 billion tax portion of the economic stimulus package (HR 598).
Last Friday, January 23, the Senate Finance Committee released its own package, which will be considered by the Committee today (Jan. 27). Compared with the House Ways & Means package, the Senate bill would provide more energy tax incentives and less for school construction bonds. The Senate bill also would temporarily suspend income taxes on unemployment benefits.
The largest component of the House and Senate tax packages is a $1000 tax
credit ($500 for individuals) distributed in the form of reductions in
payroll tax withholding spread over the course of the year. (The tax credit would phase out for upper
Highlights of the Ways & Means portion of the stimulus bill (in billions of $):
A key question being raised about the evolving stimulus bill is whether it is sufficiently focused on short-term stimulus (which should be deficit-financed) vs. long-term investment (which should be carefully crafted and paid for over time).
Former CBO and OMB Director Alice Rivlin, addressed this last week at a January 21, 2009 hearing of the Senate Budget Committee:
"The first priority is an 'anti-recession package' that can be both enacted and spent quickly, will create and preserve jobs in the near-term, and not add significantly to long run deficits. It should include temporary aid to states in the form of an increased Medicaid match and block grants for education and other purposes....The package should also include temporary funding for state and local governments to enable them to move ahead quickly with genuinely 'shovel ready' infrastructure projects....Another important element of the anti-recession package should be substantial transfers to lower and middle income people, because they need the money and will spend it quickly.....
"The anti-recession package should be distinguished from longer-run investments needed to enhance the future growth and productivity of the economy....We have neglected our public infrastructure for far too long and invested too little in the skills of the future workforce....Such a long-term investment program should not be put together hastily and lumped in with the anti-recession package...
"Since a sustained program of public investment in productivity-enhancing skills and infrastructure will add to federal spending for many years, it must be paid for and not simply added to already huge projected long-term deficits. That means either shifting spending from less productive uses or finding more revenue...." (emphasis added)
Former CBO Directors Robert Reischauer and Rudolph Penner addressed similar issues at the hearing:
A CBO analysis of the evolving stimulus package estimates
that while many provisions will generate significant government
spending in the short-term, others will generate most of their spending after FY 2010, as summarized below.
Examples of stimulus provisions that will generate most of their outlays in 2009 or 2010:
Examples of stimulus provisions that will generate most of their outlays after 2010:
In response to Republican concerns about the marginal impact of provisions with a slow spendout rate, OMB Director Peter Orszag on January 22 sent a letter to Congress stating that "our analysis indicates that at least 75 percent of the overall package (including its tax component...) will be spent over the next year and a half...." Based on CBO's estimates released yesterday (Jan 26), about two-thirds of the overall package will provide stimulus during the balance of 2009 and 2010.
On January 23, a cross-section of fiscal policy experts called on President Obama to address both America's short-term and long-term economic needs.
The memorandum was developed by fiscal policy experts at the Brookings Institution, Committee for a Responsible Federal Budget, Concord Coalition, Peter G. Peterson Foundation, Progressive Policy Institute, and Urban Institute.
Key points of the memorandum:
Recent developments: The House on January 21 passed HR 384, a bill that would place restrictions on the Treasury Department's use of the remaining $350 billion in the TARP (Troubled Assets Relief Program). A key provision of the bill would require Treasury to allocate a minimum of $40 billion to foreclosure mitigation (although Obama Administration officials have already announced their intention to dedicate at least $50 billion for that purpose).