Sanity Injection

Injecting a dose of sanity into your day’s news and current events.

What is in the proposed federal stimulus bill?

Posted by sanityinjection on January 28, 2009

The Wall Street Journal has a great piece up summarizing the various pieces of the proposed stimulus bill that is currently before the House:

http://online.wsj.com/article/SB123310466514522309.html

What is great about this article is that it explains the various pieces in simple terms and how much each will cost. Thus, readers can decide for themselves which pieces they are comfortable with.

My judgment is that more than half of the spending in this $825 billion package is either wasteful or has nothing to do with stimulating the economy. Thus I agree with House Minority Leader John Boehner’s call for House Republicans to oppose the bill in its current form. I am not suggesting that the government should do nothing, but I am suggesting that doing the wrong thing could be even worse. House leaders from both parties should work with the Administration to slim down this package until it can be supported by a bipartisan majority. That’s how the legislative process is supposed to work.

Meanwhile, Dan Gerstein has another good piece up at Forbes explaining how President Obama fits into all this. Gerstein explains that while Obama isn’t necessarily supportive of  many of the spending items in the bill, he’s not eager to pick another fight with his fellow Democrats in the House after successfully getting Speaker Pelosi to back down and remove the family planning piece. Rather, Obama will let the House Dems push through their bill on a party-line vote and concentrate on improving the bill in the Senate:

http://www.forbes.com/2009/01/27/obama-stimulus-bill-opinions-columnists_0128_dan_gerstein.html?feed=rss_opinions

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19 Responses to “What is in the proposed federal stimulus bill?”

  1. sanityinjection said

    Harvard economics professor Martin Feldstein wighs in in the WashPost about what is wrong with the stimulus bill and how to fix it:

    http://www.washingtonpost.com/wp-dyn/content/article/2009/01/28/AR2009012802938.html?hpid=opinionsbox1

  2. sanityinjection said

    And Rush Limbaugh has an op-ed piece in the WSJ offering his suggestion for bipartisan compromise on the stimulus bill:

    http://online.wsj.com/article/SB123318906638926749.html

    This represents an unusual departure for Limbaugh, who vastly prefers tearing other people’s ideas down rather than offering solutions of his own. The piece may surprise, if you forget that Limbaugh is primarily an entertainer. When he takes off his entertainment hat and puts on a public policy one, as in this piece, Limbaugh comes across as not only intelligent but downright sensible.

  3. Publius said

    Hopefully this is not the look of things to come. I fear it is. I do believe that President Obama is sincere in his desire to include both sides. Sadly, he is the only one. While what he wants may be off from what many of us would desire, I think this bill is an example of how other influences may make things worse.

  4. sanityinjection said

    The San Diego Union-Tribune says House Republicans were right to vote against the stimulus bill:

    http://www3.signonsandiego.com/stories/2009/feb/02/mz1ed2top191450-looming-fiasco/?uniontrib

  5. sanityinjection said

    In a recent press conference, House Speaker Nancy Pelosi says that every month that goes by without a stimulus plan in place, “500 million people lose their jobs.” You can watch the YouTube video, aptly titled “Nancy Pelosi: Dumber than Soap” here:

    P.S. For those confused as to why this is funny, the entire population of the United States is well under 400 million. Do the Democrats just make this stuff up as they go along or what?

    P.P.S. When President Bush said something this dumb, it was repeated ad nauseam in the media and even reprinted in books of “Bushisms” (I even own one.)

  6. sanityinjection said

    Score one small victory for the forces of fiscal sanity. The Senate has passed an amendment to the stimulus bill that strips out $246 million in tax breaks for Hollywood producers. Senate Republicans joined with 13 Democrats and independent Joe Lieberman to pass the amendment, written by the GOP’s “Dr. No”, Tom Coburn:

    http://www.nypost.com/seven/02042009/news/politics/gop_yells_cut__to_boot_for_hwood_153455.htm

    Of course, this is a tiny spoonful of the billions of dollars of pork the bill is laden with. But even some Democrats acknowledged this was nothing but a naked payback to Hollywood for contributing to Democratic candidates in the 2008 election. I congratulate the Senators who voted for this Amendment, but they must not be satisfied with simply throwing this sop to the reformers.

  7. sanityinjection said

    The Senate has added two new tax breaks to the stimulus bill. One doubles the tax break for first-time homebuyers and expands it to anyone who buys a home. The other is a tax break for buying a new car:

    http://news.yahoo.com/s/ap/20090205/ap_on_go_co/congress_stimulus

    While these changes make the bill even more expensive, they are good because they are directly targeted to two of the industries that are hurting the most, and because they directly affect consumers and don’t involve adding costly new government programs or staff. The extra cost could easily be offset by deleting more of the political pork in the bill; we’ll see if that actually occurs. But I’d rather have a $900 billion bill that is somewhat effective than an $885 billion bill that is a failure.

  8. sanityinjection said

    Update: The Senate is now poised for a vote on the stimulus bill. It will probably pass with a bare minimum of 60 or so votes to overcome a filibuster. I would be willing to bet that many Republicans will seek political cover in voting against it because they know it has the votes to pass anyway.

    In addition to the targeted tax breaks I mentioned above, the bill also includes relief from the alternative minimum tax. All these things make it a better bill than the House version. That having been said, it’s still an expensive and bad piece of legislation overall that is stuffed with pork spending. But I am convinced that the psychological consequences of doing nothing at this point are more dangerous.

  9. Tubby said

    It has been reworked and compromises have been reached. As for “pork”, I’d ask what you mean; municipal earmarks have been removed from the final bill, according to Obama. Unless by “pork” you mean something else.

    I thought Obama’s treatment of the subject at his press conference tonight was very enlightening. He states: there a) those who don’t want government to do anything, b) those who want government to do something, but want serious oversight and no “pork” added, and c) those who basically believe we can spend our way out of a recession. He contends that a) is out of the question, but that a dialog needs to happen between those in the b) and c) camps.

    It’s clear our current administration falls somewhere between b) and c). From the sounds of it, any bill that passes right now will have some degree of economic cruft, but then the cost of doing nothing is how high? And he made some very good points about the fact that spending on such things as energy-efficient federal buildings, school renovations, home weatherization, and highway rebuilding may not sound sexy in the short term, but in the end are as good a long-term investment as we can make right now — while creating jobs we so desperately need to get some demand back in the economy.

    Not to mention it includes language on curbing rampant executive compensation, the recent revelation of which has made an absolute mockery of Paulsen’s $350 billion boondoggle.

  10. sanityinjection said

    By way of response, I offer the following article fact checking Obama’ speech last night:

    http://news.yahoo.com/s/ap/20090210/ap_on_go_pr_wh/fact_check_obama

    I’ll share my thoughts on the speech in a separate post shortly.

  11. sanityinjection said

    Betsy McCaughey exposes a poison pill in the House version of the stimulus package – the new ofice of the “National Coordinator of Health Information Technology”. Simply put, this is what we used to call “socialized medicine” and will mean the end of our nation’s top-quality health care:

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aLzfDxfbwhzs

    I am having difficulty discerning for sure, because the bill is such a mess of amendments, but I *think* the Senate version strikes this provision. As well it should, because even if you think socialized medicine is a good thing, it has absolutely *nothing* to do with stimulating the economy.

    The negotiations on the final House-Senate compromise language are going to be tough. The final bill must not contain this health care insanity, and it must preserve the Senate version’s expanded tax break for homebuyers. Only under those conditions can I in good conscience hold my nose and support it.

  12. sanityinjection said

    UPDATE: The conference committee has deleted the Senate tax break for homebuyers from the bill. There is no way you can tell me that out of a $789 billion bill, you can’t afford some $35 billion for a targeted tax break that *directly* adresses one of the key sectors fueling the economic crisis.

    I would urge members of the House and Senate to vote against this legislation. I can pretty much guarantee at this point that starting over from scratch would lead to a better bill.

  13. tubby said

    I’m a little confused about the tax credit theory. This seems dangerously like getting more people to spend money they don’t necessarily have on homes that are still at inflated prices. This blog post confirms your theory that we need to do more to stimulate the housing market:
    http://blogs.wsj.com/developments/2009/02/12/homebuyer-credit-wont-stabilize-market-analysts-say/

    But the economist they quote seems to be saying that the 30-year fixed interest rate has a lot more bearing on stimulating this sector than the level of a tax break (but maybe I’m reading that in a biased way).

    I guess I’m just worried that a significant tax credit on home buying might just spark another overbuying bubble. What am I missing here?

  14. tubby said

    In this blog post, Michael Tomasky points out how hard it will be to actually get some of the stuff done that’s in the stimulus, not to mention the pointlessness of Geithner’s Tuesday address (which I have yet to see). Also, it muses about the level (lack, rather) of communication attempted between the White House and the Congressional Republicans. Maybe Obama and his congressional liaison are realizing how they must pick their battles.
    http://www.guardian.co.uk/commentisfree/michaeltomasky/2009/feb/12/barackobama-useconomy

  15. sanityinjection said

    Finding anything in The Guardian that I have no major argument with is always a nice surprise 🙂

  16. sanityinjection said

    According to Bloomberg, the compromise stimulus package includes $6.3 billion to help expand high-speed Internet service in rural areas. This is a direct giveaway to the telecoms that contributed heavily to Democrats in the last election. What it means is that firms like Verizon can do their fiber build-out in rural areas on the taxpayer’s dime, then keep all the profits from providing the Internet service to residents. Somebody want to explain to me how that stimulates anything other than Verizon’s bottom line?

  17. tubby said

    Some kind of implicit rural “education” stimulus? I guess?

  18. sanityinjection said

    Here’s a good article explaining that both liberals and conservatives are disappointed with the stimulus bill:

    http://www.mcclatchydc.com/227/story/62082.html

    The bottom line is, the economy is probably going to be crappy for the rest of 2009 no matter what we do. As the final quote in the article suggests, people who are supporting this bill are mostly doing so because they haven’t been offered any better alternatives.

  19. sanityinjection said

    Newsweek’s Robert Samuelson supports the idea of a big stimulus but savages the bill Congress passed as misguided and wasteful. He notes that as much as a quarter of the spending in the bill won’t occur until 2011 or later – far too late to create jobs or stimulate the economy now:

    http://www.realclearpolitics.com/articles/2009/02/obamas_stunted_economic_stimul.html

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