Below are a series of questions and answers on the top issues surrounding the economic recovery package the Senate will take up this week.
Ø Q: Is it true this bill contains pet projects by members, even though the President pledged there would be no earmarks?
A: No. This bill contains no congressionally directed spending.
Ø Q: Some say that tax cuts are the most effective way to stimulate the economy and complain that this bill does not have enough tax cuts. Is that true?
A: Tax cuts, largely for the middle class, comprise more than one-third of this bill. In fact, the bill is designed to provide tax relief to 95 percent of Americans. But while these tax cuts can help increase economic activity, most economists agree that we get the most bang for the buck through initiatives that directly create jobs and put money into the hands of those who will spend it quickly. We already tried an all-tax-cut approach under President Bush and it didn’t work.
Ø Q: Is it true that the bill will be ineffective because it won’t help the economy quickly enough?
A: The bill is still a work in progress. However, according to the Senate Appropriations and Finance committees, 78 percent of the investments and tax cuts in the bill will reach the American people by September 30, 2010. Moreover, some provisions of the bill – such as the Making Work Pay credit – are specifically designed to increase the movement of money back into the economy. Experts say that putting cash in most workers’ paychecks over a period of time, instead of providing a lump sum like the 2008 rebate payment, increases the chances that the money will be immediately spent. In addition, the bill includes a one-time payment to seniors, veterans, and the disabled.
Ø Q. Won’t some appropriations not be spent until after 2010?
A. While most of the funding will be spent before 2011, many economists believe that the economy still will be weak at that point. Those investments that will continue to spend out after 2010 can be helpful in smoothing the course of the recovery, while providing longer term benefits to the economy.
Ø Q: Why isn’t there more in the bill to combat the housing crisis?
A: Democrats have already led the way in seeking solutions to the housing crisis, including our insistence that a substantial portion of TARP funding be allocated for this purpose. In addition, this bill substantially improves the tax credit for first-time homebuyers who purchase a home, and it supports redevelopment of foreclosed homes, to help prevent blight and the associated decline in housing values. The Obama Administration is developing other measures to address the housing crisis and this issue is likely to be considered by the Senate in the near future.
Ø Q: Isn’t it true that much of the infrastructure investment in this bill will take so long to implement that it won’t help revive the economy?
A: According to some estimates, there are over 5,000 ready to go transportation infrastructure projects around the country. Getting funds to those projects will create jobs and help turn this economy around.
Ø Q: Isn’t it true that this is a highly partisan bill and that input from Republicans has been ignored?
A: That is simply not true. Democrats have worked with Republicans throughout the process and the President has gone the extra mile to reach out and work with the GOP. The bill got to the floor after a fair and deliberative process in the Finance and Appropriations committees, and amendments from senators in both parties can be offered and debated on the floor. Note that last year, Democrats were willing to compromise with Republicans and eventually agreed to a stimulus bill that was almost entirely based on tax cuts. Given the enormity of the economic crisis, surely it is reasonable to ask Republicans to come to the table in the same spirit of compromise.
Ø Q: Is it true the bill will allow the Making Work Pay credit to go to illegal aliens?
A: Absolutely not. The measure provides tax relief to workers who are here legally and pay taxes. This critique is a red herring, only meant to serve as a distraction. The measure prevents anyone without a Social Security number from claiming the credit. Furthermore, the bill expressly disqualifies nonresident aliens. In short, the requirements in this bill are the same that were used for the 2008 rebate checks that were passed with Republican support under President Bush.
Ø Q. Doesn’t this bill include funding for items like contraceptives and improvements for the National Mall that have nothing to do with creating jobs?
A. Those particular provisions are not included in the Senate bill. And if senators have complaints about other specific provisions, they are free to make their case on the Senate floor.
Ø Q: How do you respond to the charge that this bill will permanently increase the size of government programs?
A: A significant portion of the spending is temporary in nature. Increased funding for programs like unemployment insurance and food stamps are meant to get workers back on their feet. In addition, a number of the tax cuts are also temporary and have defined expiration dates.