Senate Democrats

Republican Rhetoric and Reality on Economic Stimulus

Republican rhetoric on the economic stimulus bill has heated up of late, but their claims have been divorced from reality. Senator McConnell claimed Democrats were delaying rebate checks, but checks cannot be sent until mid-May no matter what. Senator Gregg said extending unemployment benefits would not boost the economy, but economists say it is one of the best ways to get money into the economy quickly. Republican Senators referred to the additional provisions sought by Democrats as “pet projects,” even though they are widely-supported measures such as heating assistance for low-income families and rebates for seniors and disabled veterans. Finally, Senator Kyl said economic stimulus would not help the economy recover, in the face of calls for stimulus from the President and Secretary Paulson. What’s the common theme here? Bush Republicans do not want to pass the Senate Finance Committee bill and have used every tactic in the book to delay its passage.

Contrary to the Facts, Senator McConnell Claimed Democrats Were Delaying Rebate Checks

RHETORIC: Senator McConnell Claimed Democrats Were Playing Politics and Delaying Rebate. “But then the stimulus bullet train turned into a rickety stage coach here in the Senate. When it got right down to it, Senate Democrats couldn’t do what House Democrats had done. They couldn’t resist — just once — a chance to play politics. If Americans are wondering why their checks aren’t in the mail, they can find it in last week’s news clips.” [Senator McConnell Press Release, 2/5/08]

  • REALITY: Debate in the Senate Is Not Delaying Rebate Checks. According to the Center on Budget and Policy Priorities, the earliest that the IRS can begin to send out rebates is mid-May.  No matter how fast Congress enacts the stimulus package, the IRS cannot start issuing the rebates any sooner because it must first process the 2007 tax returns. The IRS needs 60 days after enactment to reprogram its computers for the rebates. This means that if Congress enacts stimulus legislation anytime between now and mid-March, the rebates will start to go out in mid-May.  Only if stimulus legislation isn’t enacted by mid-March, would there be any delay in rebate checks. [CBPP, 1/31/08]

Contrary to Economic Experts, Senator Gregg Said Extending Unemployment Benefits Would Not Stimulate the Economy

RHETORIC: Senator Gregg Argued Extending Unemployment Benefits Would Only Allow People Stay on the Dole, Not Help the Economy. According to Senator Judd Gregg, “[t]hey stay on unemployment almost until the end and then they find a job. If you extend it another year, those folks who could be productive, producing a job, creating economic activity by having a job will stay on unemployment even though there may be a job out there that they could take.” [Associated Press, 2/3/08]

  • REALITY: Extending Unemployment Benefits Strengthens Economic Stimulus By Quickly Boosting Consumer Demand and Helping Those Especially Hard-Hit.  According to the Center for Budget and Policy Priorities, “These extended UI benefits strengthen the stimulus package, for two reasons.  First, these benefits are very highly rated as economic stimulus, because the dollars can get out the door fast and will be spent quickly, providing a needed immediate boost to consumer demand.  Second, these benefits would aid a group of people who are experiencing particular hardship because they have lost their jobs in an economy where many workers are not quickly finding new ones.  Recent Labor Department data attest to this:  the percentage of unemployed workers who have been out of work for at least half a year and are still looking for a job is at an unusually high level for a period on the eve of a recession.  So is the long-term unemployment rate.  These figures are much higher than they were at the start of the last recession in 2001.” [CBPP, 1/31/08]
  • REALITY: Economist Found Extending Unemployment Benefits Would Produce More New Economic Activity Per Dollar Than Tax Rebates or Business Tax Credits. “According to Mark Zandi of Moody’s, each dollar spent on extended unemployment benefits yields $1.64 in increased economic activity while each dollar in increased food stamp benefits creates $1.73 in new economic activity. Meanwhile, the business tax credits in the proposed package would generate only 27 cents in increased economic activity per dollar of cost and would be absorbed much more slowly into the economy.” Additionally, Zandi found that non-refundable lump-sum rebates would produce $1.02 in new economic activity while refundable lump-sum rebates would produce $1.26 in new economic activity. [OMB Watch, 1/24/08;, Zandi Column, 1/22/08]

Contrary to Any Sense of the Economic Strains Americans Face, Senators McConnell and Cornyn Called Additional Provisions of the Finance Bill Pet Projects

RHETORIC: Senator McConnell Referred to Provisions in Senate Finance Committee Bill as “Pet Projects.” “Two weeks ago they saw what looked like a bipartisan agreement between democrats and republicans in Congress and the White House over the details of a deal. They saw Speaker Pelosi and Leader Boehner, to their great credit, resist the temptation to add pet projects that they knew would slow the package down and rob it of its stimulative effect.” [Congressional Record, 2/5/08]

RHETORIC: Senator Cornyn Referred to Provisions in Senate Finance Committee Bill as “Pet Projects.” “So why it is we can’t in a similar fashion take up that legislation and pass it without slowing it down by adding on a bunch of extraneous spending by people viewing this as perhaps a Christmas tree that they want to hang their favorite ornament on as a way to fund their pet projects, why it is we can’t resist that temptation and expedite passage of this important legislation is, frankly, beyond me.” [Congressional Record, 2/5/08]

  • REALITY: So-Called “Pet Projects” Include Extending Unemployment Benefits and Giving Rebates to 20 Million Low-Income Seniors and Disabled Veterans. “The Senate Finance Committee approved a broader package that would send bigger checks to low-income workers, extend unemployment benefits for 13 weeks beyond the usual 26 weeks, and expand eligibility for tax rebates to low-income senior citizens, disabled veterans and married couples earning up to $300,000 annually.” [CQ Today, 2/4/08]
  • REALITY: “Pet Projects” Also Include Adding $1 Billion to Help Low-Income Families Heat Their Homes and Help Address the Current Housing Crisis. “Senate Democrats are expected to further expand the Finance Committee’s package to include $1 billion for low-income energy assistance and House-passed provisions that would increase the size of mortgage loans that the Federal Housing Administration may insure and that Fannie Mae and Freddie Mac may purchase.” [CQ Today, 2/4/08]

Contrary to Views of President Bush and Secretary Paulson, Senator Kyl Said Economic Stimulus Will Not Boost the Economy

RHETORIC: Senator Kyl Said Economic Stimulus, Will Not Boost the Economy. “My view, contrary to the president and to some others in my party, is that tax rebate checks and an extension of unemployment benefits will not boost the economy.” [Congressional Record, 2/5/08]

  • REALITY: President Bush Said Passing Tax Rebates in the Economic Stimulus Will Help the Economy Recover. “Secondly, a concern is whether or not our consumers will lose confidence in our economy. You don’t want that to happen at Hallmark — you want the consumers to still buy your product on a regular basis. And one way to address that issue is to have a temporary, robust tax rebate. And that’s what we’re working on in Congress. You hear this discussion of a stimulus package — well, a key component of that package is to give you some of your money back so you can spend it… the sooner we can get money into our consumers’ hands, the more likely it is, is that this economy will get back — recover from this period of uncertainty.” [President Bush, 2/1/08]
  • REALITY: Secretary Paulson Said Economic Stimulus Bill Would Make a Difference This Year in the Economy. “This is a fiscally responsible package, but the one that will make a difference this year in the economy.” [Fox News Sunday, 1/27/08]
  • REALITY: Minority Leader Boehner Said Stimulus Package Would Help Get the Economy Moving. “This package will help get our economy moving in the quickest and most effective way possible: by putting money back in the pockets of American families and giving businesses incentives to create new jobs and grow our economy.” [Rep. Boehner Press Release, 1/29/08]