Don’t expect a stimulus bill anytime soon — or rather, a stimulus bill that does what it’s supposed to do.
A Senate compromise bill expected to win approval Tuesday tilts the legislation away from the kinds of programs needed to soften the economic body blows, keep states afloat and put a little bit of cash in the pockets of middle-class Americans toward the failed policies of the past.
The bill is better than anything we might have expected from the Bush administration, but the compromise reached in an effort to bring several GOP moderates on board makes it far inferior to the lan approved by the House.
From The New York Times:
The price tag for the Senate plan is now only slightly more than the $820 billion cost of the measure adopted by the House. Both plans are intended to blunt the recession with a combination of tax cuts and government spending on public works and other programs to create more than three million jobs.
But the competing bills now reflect substantially different approaches.
The House puts greater emphasis on helping states and localities avoid wide-scale cuts in services and layoffs of public employees.
The Senate cut $40 billion of that aid from its bill, which is expected to be approved Tuesday. The Senate plan, reached in an agreement late Friday between Democrats and three moderate Republicans, focuses somewhat more heavily on tax cuts, provides far less generous health care subsidies for the unemployed and lowers a proposed increase in food stamps.
To help allay Republican concerns about the cost, the Senate proposal even scales back President Obama’s signature middle-class tax cut. The Senate plan also creates $30 billion in tax incentives to encourage Americans to buy homes and cars within
the next year.
Josh Marshall, on Talking Points Memo, offers a pretty fair summary of what happened this week:
So Senate Republicans invoked the threat of a filibuster. And the ‘centrist’ group has leveraged that threat to add more tax cuts that won’t accomplish anything and cut out a lot of spending that would.
John Nichols, in The Nation, sounded a mournful note in considering the trade offs that appear to have won “the votes of two Republican (Maine’s Susan Collins and Pennsylvania’s Arlen Specter) and perhaps another (Mainer Olympia Snowe) that were needed to undermine the threat of a GOP filibuster,” a deal in which Senate Majority Leader Harry Reid “surrendered $86 billion (in) proposed stimulus spending.”
In doing so, the Democrats agreed to cut not just fat but bone, and to warp the focus and intent of the legislation.
The Senate plan is dramatically more weighted than the House bill toward tax cuts (which account for more than 40 percent of the overall cost of the package). This is despite the fact that there is a growing consensus — among even conservative economists and policy makers — that tax cuts will do little or nothing to stimulate job creation in a country that lost almost 600,000 positions in January alone. As French President Nicolas Sarkozy, no liberal, said Friday of countries that opt for tax cuts rather than stimulus: The approach “will bring them nothing” in the way of economic regeneration.
The Senate’s increased emphasis on tax cuts comes at the expense of the aggressive spending in key areas that might actually get a stalled economy moving.
Spending for school construction that would actually have put people to work — while at the same time investing in the future — has been slashed. (Almost $20 billion slated for school construction is gone.)
Money for Superfund cleanup, Head Start and Early Start child care, energy efficiency initiatives and historic preservation projects — all of which create or maintain existing jobs — has been cut. Supplemental transportation funding has been hacked.
The House’s proposal to help unemployed Americans maintain their health benefits has been chopped down.
Ouch. Nichols continues:
In every sense, the Senate plan moves in the wrong direction.
At a time when smart economists are saying that a bigger, bolder stimulus plan is needed, Senate Democrats and a few moderate Republicans have agreed to a
smaller, weaker initiative.And Republicans are still delaying passage. It could be Sunday, even Monday, before a vote is taken. And who knows what more will be lost — in time and stimulus spending before President Obama signs a bill.
These are the fruits of bipartisan fantasies and the compromises that follow upon them. President Obama, who should have been on television addressing the nation and doing everything in his power to rally support for a sufficient stimulus plan, will be lucky if he gets anything by the President’s Day deadline he set. (Even after the Senate measure passes, a difficult process of reconciling the very different House and Senate bills must take place. Then there will be more votes before any legislation gets to the president’s desk.)
The White House still wants to advance this measure, as do Senate Democratic leaders. And, considering the urgency of the moment, they are probably right to try to do something. But if the final “stimulus package” proves to be insufficient to jump start the economy — and if what is left of public confidence in the prospect of turnaround collapses as a result — this Friday night compromise will be remembered with pained regret.
Hank Kalet 
I do not understand why people are having diffculty understanding. The number of unemployed people (11.6 million) and the unemployment rate (7.6 percent) rose in January. Over the past 12 months, the number of unemployed persons has increased by 4.1 million. The Department of Labor reported today that nonfarm payroll employment fell sharply in January (-598,000) and the unemployment rate rose from 7.2 to 7.6 percent. Payroll employment has declined by 3.6 million since the start of the recession in December 2007, …. most of this mess happening only in past three months! And some wonder Obama is pushing so hard for a stimulus package. Is the Herbert Hoover approach, do nothing, all we need, leading us to a twelve year depression ??
No? Tax cuts, when accompanied by spending cuts, don\’t accomplish anything? Please explain how Kennedy\’s \”rising tide raises all boats\” tax cut and Regan\’s \”government is the problem\” tax cut ignited decades of prosperity. Guess it was just luck. Personally, I\’d like to see the congress critters ELIMINATE the corporate tax (corps don\’t pay taxes they just pass them along to real people hidden in the prices), the death tax (grave robbers! destroy a person\’s life\’s work like the real family farm), and the regressive payroll tax (humorously referred to as the employee\’s and employer\’s share; like it all doesn\’t come out of the employee\’s pocket).Of course, to pay for it, I\’d close the Department of Agriculture (for rich psuedo farms), Commerce (for big business), HHS (meddling the State\’s business and spend lots of money), … … did I pay for it yet? … … I\’d end the psuedo-Drug War, pardon all non-violent drug offenders, shut down Selective Service, close Job Corps, Head Start, … … did I pay for it yet? … AMTRACK, Post Office, … … I must be close … … Repeal legal tender laws.If we did that I\’m SURE that there would be an economic boom that would rival any previous one.I\’d shut down the TSA, shut down welfare, and take the plastic bag off the Statue of Liberty. No illegal immigration problem if there are ZERO freebies. Everyone has to work. No free loaders in the life boat.I\’d task the FBI to review every fraudulent loan document and prosecute the fraudsters.I think that would be a good first step! It\’s easy once you get the country moving back towrds Liberty!
Have I said yet how much I despise, hate and loathe that nauseating feculent ideology know as libertarianism? It\’s just greed, selfishness, avarice, total self absorption, meism (raised the nth degree) and empathylessness masquerading as a philosophy.
>Have I said yet how much I despise, No, not lately, the quiet was deafening.>It's just greedNo, it's not. Greed would be if wanted liberty for myself but not for you. 🙂 I want you to be as free as I can be.>empathylessness Wanting solutions that work? This stimulus bill is a load of pork. >Cutting the hidden corporate tax that everyone, poor included, pays is bad? We, as a people, would spitting mad if we saw how much tax we really do pay. The only way we have to know is the total gooferment spend. Why can't we have \”truth in taxation\”? Since only real people pay taxes why are taxes hidden in the price of a can of beans. Those beans are some percent tax. No one can tell. Tax on all the components of production. Tax on the products. Taxes, taxes, taxes.Argh!When we get to keep our earnings, we can be generous with EFFECTIVE charity. That's what this is all about. Who controls the purse strings! Control.Gooferment wants to pick winners and losers. At some point, it has to stop. All the producers will just stop producing. Then where will all the takers be?
I should hasten to add that I don\’t hate libertarians, just the ideology and its quasi religious cultishness. I am sure that libertarians are decent and sincere in their beliefs, they must be forgiven, up to a point.More than 500,000 jobs were lost in December and more than 600,000 jobs were lost in January. More banks are going belly up, foreclosures continue apace, more and more people are losing health care because they are losing their jobs. Tax cuts are not the answer, they don\’t create good paying jobs. Bush cut taxes and it did no good. This is not the time to act like Herbert Hoover. Big business and corporations don\’t pay their fair share of taxes because of the all the loop holes, tax havens and tax dodges.
*** begin quote *** Big business and corporations don\’t pay their fair share of taxes because of the all the loop holes, tax havens and tax dodges.*** end quote *** We agree corporations don\’t pay taxes. Fair share or not. They are just a fiction that passes them through. If a company makes widgets and they have to pay a tax, or fee, they just build it into the cost of the product. You put a dollar tax on a dollar widget. Shazaam! Widgets now cost two bucks! How can you say that I\’m NOT paying that tax when I buy a widget?Corporations don\’t pay taxes; people do!