Time to Scrap the Stimulus and Start Over

dajoki

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Tue Feb-10-09 12:37 PM
Original message

Time to Scrap the Stimulus and Start Over

http://d-day.blogspot.com/2009/02/lowdown.html

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Here's a list of what the Axis of Nelson-Collins cut out of the bill to make room for more tax cuts.

$40 billion State Fiscal Stabilization
$16 billion School Construction
$1.25 billion project based rental
$2.25 Neighborhood Stabilization (Eliminate)
$1.2 billion in Retrofiting Project 8 Housing
$7.5 billion of State Incentive Grants
$3.5 billion Higher Ed Construction (Eliminated)
$ 100 million FSA modernization
$50 million CSERES Research
$65 million Watershed Rehab
$30 million SD Salaries
$100 million Distance Learning
$98 million School Nutrition
$50 million aquaculture
$2 billion broadband
$1 billion Head Start/Early Start
$5.8 billion Health Prevention Activity.
$2 billion HIT Grants
$1 billion Energy Loan Guarantees
$4.5 billion GSA
$3.5 billion Federal Bldgs Greening

The $40 billion for state aid is astounding. You're not going to see an economic recovery if the states are having to cut budgets at the same time the feds expand them. They'll cancel each other out.

What you don't see in there are the three big tax cuts that the Senate put in this bill that has crowded out this spending, not for reasons of effectiveness, but purely because squishy moderates couldn't live with a $900 billion dollar bill. They are:

1) $70 billion dollars for a patch so that the Alternative Minimum Tax (AMT) doesn't affect high-middle-income earners making under $1 million dollars a year. This is passed annually because Congress is too cowardly to rewrite the tax code. But it doesn't belong in a stimulus bill, as no less than House Minority Whip JON KYL just said in a floor speech. People making $400,000 a year aren't likely to spend money they get to keep as a result of fixing the AMT.

2) At least $35 billion dollars for a $15,000 home buyer's tax credit, which will only go to people who have enough money to buy a house. This is a craven attempt to reinflate the housing bubble before prices have settled, and because there's so much inventory on the market it will not spur hardly any new home construction.

3) Around $11 billion for a tax credit for car buyers, which will only go to people who have enough money to buy a new car. This is not tied to greening the US fleet and will be implemented before fuel economy standards have changed over, so it doesn't even reward fuel efficiency or reducing greenhouse gas emissions.

These are tax breaks for suburbanites, which in all likelihood won't get spent at anywhere near the rates that they would in the hands of the poor or middle class. And they won't create jobs, either.
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http://uspoverty.change.org/blog/view/should_we_scrap_the_stimulus_and_start_fresh

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Trying to return to the status quo, which right now is an economic inequality that rivals that leading up to the Great Depression, is never advisable. And the current stimulus package - long on tax cuts and short on stimulus - will do exactly that.

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Consider this: Our economy is 5M jobs in the hole; we lack at least 5M units of affordable housing in the U.S.; almost 14M people owe more on their mortgages than their houses are worth; and we've lost $2T from our retirement accounts in one year.

In CT, where my mom lives, state mental health hospitals are being closed and patients are being moved and people are facing layoffs; in CA, one of the largest and oldest work programs for low-income young adults is likely to be eliminated. Yet, the current Senate bill removes $40b in aid to states. Unemployment benefits would only be increased $25 per week, or $3/day. Almost half of all Americans out of work are not even receiving unemployment benefits.

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So there's goes the money for additional housing vouchers, money for local anti-foreclosure efforts, community development projects (repairing blighted properties, fostering small business development, affordable homeownership sales, etc.), and upgrading older, energy inefficient properties to cut residents' utility costs. Keep in mind that the majority of low-income individuals who benefit from community development interventions and housing subsidies are single moms with kids, the elderly and the disabled. Christy Hardin Smith's got the dirt on how hard children are being hit by the current crisis and this proposal.

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All I know is that our government is subjecting us to ideological debates when they should be figuring out how to relieve the crushing burden of debt individual households and entire communities bear. This means throwing out foolish proposals for tax credits for more homeownership when we still need prices to fall further. This means pursuing bankruptcy reform now. This means keeping workers - including government employees - in their jobs if they still have them and providing emergency relief to their neighbors and loved ones who are already out of work. This means providing aid to states so they can continue to provide healthcare, food and shelter - directly and through their non-profit partners - to Americans struggling nationwide. And it means figuring out how to best design and allocate funds for job creation, so we can slowly move people back into the workforce and get some much needed modernization in education, healthcare and infrastructure that this country desperately needs.