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Tilting at Windmills

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February 12, 2009

WHAT'S IN THE COMPROMISE PLAN?.... OK, so Congress and the White House struck a deal on a $789 billion economic stimulus plan. What's in it?

Some of the key details are still elusive, but the Washington Post notes that the package has four broad categories: "tax breaks for individuals and businesses; investments in health care and alternative energy; funding for 'shovel-ready' infrastructure projects; and aid to state and local governments, including expanded benefits for individuals who are unemployed and lack health insurance."

Of the $789 billion, $507 billion will go to spending programs, while $282 billion goes to tax cuts -- a 64%-36% split. The Collins/Snowe/Specter team successfully pared the legislation back -- the bill is still too small -- but the New York Times nevertheless noted that the recovery package "will be the most expansive unleashing of the government's fiscal firepower in the face of a recession since World War II."

Although the final legislative language was not immediately available, lawmakers said the bill contained more than $150 billion in public works projects for transportation, energy and technology, and $87 billion to help states meet rising Medicaid costs.

Despite intense lobbying by governors around the country, the final deal slashed $25 billion from a proposed state fiscal stabilization fund, eliminated a $16 billion line item for school construction and sharply curtailed spending to provide health insurance for the unemployed.

In driving down the total cost — from $838 billion for the Senate stimulus bill and $820 billion for the House-passed measure — lawmakers also reduced the Senate's proposed tax incentives for buyers of homes and cars, which hold big public appeal.

The final agreement retained a $70 billion tax break to spare millions of middle-income Americans from paying the alternative minimum tax in 2009. Some Democrats decried the provision as a costly addition that would not lift the economy and that Congress would have approved, regardless of the recession.

On the AMT, those Democrats are right.

In the big picture, however, the Post noted that the final version of the bill, after "tumultuous negotiations," looks a whole lot like "the broad outline that Obama had painted more than a month ago."

It's a good point. While there's some debate about whether the Obama White House scored a big win with this package or not, the administration, a month ago, envisioned a $775 billion plan, with $300 billion in tax cuts. The finished product looks pretty similar.

The package should be more aggressive and more ambitious, but "as a legislative achievement, coming so early in the term, this is astonishing."

Steve Benen 8:00 AM Permalink | Trackbacks | Comments (23)

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Comments

My concern is that this will be the last legislative accomplishment before the 2010 elections. A lot more needs to be done to get the economy moving, but Senate Republicans are going to point to this bill and say all has been done that needs to be done. They have 41 votes and can stop damn near anything.

I agree with the AMT comments. The AMT patch was going to be passed in any event. It had no place in the stimulus package. I would like to see AMT fixed permanently by indexing.

Posted by: Ron Byers on February 12, 2009 at 8:23 AM | PERMALINK

The AMT patch was necessary. If you've ever paid it, or may have to pay it, it's an enormous PITA. It should be removed, and the tax code both made more steeply progessive at the top (50% and no hedge fund break) and broadened (meaning fewer deductions). In this timeframe, just patching it makes sense.

Posted by: jayackroyd on February 12, 2009 at 8:28 AM | PERMALINK

Is anyone reporting what is actually in the bill, instead of merely breaking it down into broad categories, or making fuzzy references like the final deal slashed $25 billion from a proposed state fiscal stabilization fund or reduced the Senate's proposed tax incentives for buyers of homes and cars?

Also is there nowhere to be found a journalist who will ask how the AMT is stimulative? Even fixing it is unjustifyable. It's not inflation that makes more people subject to it. It's the Bush tax cuts. And it's time to stop treating it like it's an epidemic.

Posted by: Danp on February 12, 2009 at 8:32 AM | PERMALINK

Yes, this bill is an achievement in light of all the republican idiocy. But it's like the initial chute that a skydiver releases to pull the main chute out that will enable a soft landing.

Once the ground starts approaching, some of the relatively sane republicans will start calling for Congress to pull the other rip cord.

Posted by: bdop4 on February 12, 2009 at 8:43 AM | PERMALINK

jayackroyd, nobody is suggesting the AMT shouldn't be patched (well, danp is and maybe a few others).

The main complaint is that it should not be in the stimulus bill. The patch has very poor multipliers (for money spent vs GDP increase) compared to some of the items it replaced, and it has been routinely patched by Congress on a yearly basis regardless of the state of the economy). All leaving it in does is make the stimulus bill look bigger.

It should have been taken out and replaced by the car and home purchase credits and school construction and health care spending that the 'moderates' axed.

Then the AMT patch could be enacted during the normal budget process as usual.

Posted by: tanstaafl on February 12, 2009 at 8:46 AM | PERMALINK

Benen: "the New York Times nevertheless noted that the recovery package 'will be the most expansive unleashing of the government's fiscal firepower in the face of a recession since World War II.'"

I call b.s. on the New York Times. In 2001, Bush and friends passed tax cuts worth $1.2 trillion under the guise of economic recovery...a good $400 billion more than this recovery package.

The NYTimes should consider less drama (i.e. "expansive unleashing", "fiscal firepower") and more facts in their reporting.

Posted by: CJ on February 12, 2009 at 8:53 AM | PERMALINK

...the administration, a month ago, envisioned a $775 billion plan, with $300 billion in tax cuts.

This is good---Mr. Obama got a larger package ($789B vs. the original $700B), and he surrendered less in the way of tax cuts ($282B as opposed to the envisioned $300B). Now, given that the AMT is included in that number, that actual "GOPer goodie-bag" (it is wise to always remember that tax cuts are red meat for the Republikanner Beastie's "base") has a raw value of only $212B---and most of that is targeted toward groups that are traditionally Democratic-leaning.

As for the AMT being upfronted into this legislation, the GOPer brigade inherits a lose-lose situation: Working and middle-class Americans don't take the brunt of "tax relief for the wealthy," and the traditional tax-break argument fomented by the Right didn't go into the pockets of those who need tax relief the least of all---rich Republican donors and their pals on K Street.

Mr. Obama's Panzers just rolled through the legislative Ardenne; outflanking the GOP "Maginot Line" of tax breaks for the wealthy, while simultaneously denying them the "Dunkirk Rescue" represented by their false dichotomy of empty-rhetoric, bipartisan centrism.

The foaming-at-the-mouth jowl-flapping of Rush Limbaugh will begin in 5...4...3........

Posted by: Steve W. on February 12, 2009 at 8:56 AM | PERMALINK

the failure of low expectations as a win, and the all spin zone.

Next up and looking to take advantage of the momentum, the administration said to be going for two in a row with a resolution to make Monday the official first day of the business week. Republicans are said to be united in strongly opposing the initiative as it erodes family values. The administration thinks they can improve on their hugely successful bi-partisan republican support of the recently agreed to tax-cut plan by at least 30% with 4 of 178 Congressional republicans targeted for support of the measure.

Administration officials were girding for a protracted fight, but remain optimistic at notching another "big win" for the young administration, hoping to proclaim Monday the official first day of the business week by next Labor Day.

Posted by: zoot on February 12, 2009 at 9:18 AM | PERMALINK

This is a good example of how a lousy legislative process produces a lousy bill. The vast majority of spending in this bill has nothing to do with stimulating the economy. The final version of the bill strips out measures that would have had a big impact, such as doubling the tax break for first-time homebuyers. The bill is loaded with legislators' pet projects. I challenge anyone to actually read the text of the bill and see if you're not shocked by what it contains.

Posted by: SanityInjection on February 12, 2009 at 9:31 AM | PERMALINK

Wow. Really. This is what a win looks like? $1 in corporate tax cuts generates $.30 in stimulus. $1 in food stamps generates $1.80 in stimulus. $1 in infrastructure generates $1.50 in stimulus. Hmm...

If this is a win, I'd hate to see a loss.

Posted by: Diogenes on February 12, 2009 at 9:34 AM | PERMALINK

Actually, having the ATM cut as part of the tax cuts is a good thing. It reduces the amount of extra tax cuts.
I am just hoping and praying that Obama will come back for the money for the states. State layoffs and service cuts are going to get ugly very, very fast and it should be easy to build a tidal wave of support if Obama uses the bully pulpit for this.

Posted by: Jessica on February 12, 2009 at 9:49 AM | PERMALINK

In fact, aid to prevent state layoffs and service cuts might be the ideal issue to actually force the Republicans to filibuster. Let them stand up there day after day explaining to the nation why it is important to inflict so much suffering.

Posted by: Jessica on February 12, 2009 at 9:51 AM | PERMALINK

To be clear, I am saying that the ATM tax cut was better than some other tax cut. I am assuming that a certain level of tax cuts was unavoidable.
I agree that the school construction and especially the aid to states would have been better if that were possible.

Posted by: Jessica on February 12, 2009 at 9:53 AM | PERMALINK

With at least a two trillion dollar hole in the ponzi economy and maybe half of this $800 billion that will actually achieve some stimulus, does this translate into a potential effectiveness of 20%? OK, 30% to be generous.

Posted by: lou on February 12, 2009 at 10:12 AM | PERMALINK

There goes Clinton's greatest domestic achievement, welfare reform. And in only two weeks.

Posted by: red state mike on February 12, 2009 at 10:13 AM | PERMALINK

Yes, this bill is an achievement in light of all the republican idiocy. But it's like the initial chute that a skydiver releases to pull the main chute out that will enable a soft landing.

Once the ground starts approaching, some of the relatively sane republicans will start calling for Congress to pull the other rip cord.

Off topic, has anyone else gotten a message from the website, saying that you've posted too many times and have to wait? I post fairly regularly but I'm not nearly as prolific as a lot of other regulars.

Posted by: bdop4 on February 12, 2009 at 10:29 AM | PERMALINK

This is what a win looks like?

"Better than nothing" is now what winning looks like.

Posted by: qwerty on February 12, 2009 at 10:54 AM | PERMALINK

Off topic, has anyone else gotten a message from the website, saying that you've posted too many times and have to wait?
Posted by: bdop4

Heh...mine says I'm not allowed to post.

Posted by: red state mike on February 12, 2009 at 11:25 AM | PERMALINK

Heh...mine says I'm not allowed to post.
Posted by: red state mike

given that the drooling-in-your-underwear tripe you've submitted to-date doesn't meet the minimal, short-yellow-bus, intellectual definition of "posting", then the restriction doesn't really matter---does it?

Posted by: Steve W. on February 12, 2009 at 11:43 AM | PERMALINK

As for the AMT being upfronted into this legislation, the GOPer brigade inherits a lose-lose situation: Working and middle-class Americans don't take the brunt of "tax relief for the wealthy," and the traditional tax-break argument fomented by the Right didn't go into the pockets of those who need tax relief the least of all---rich Republican donors and their pals on K Street.
Posted by: Steve W.

The tax breaks will be the quickest acting of the stimulus actions, and the republicans will take credit for fighting for them, and the working and middle class will remember this.

Posted by: red state mike on February 12, 2009 at 12:00 PM | PERMALINK

and the republicans will take credit for fighting for them,...
"illegally posted" by red state mike

The "republicans" (I agree; they're a common noun, like "dung" or "food poisoning", and unworthy of a "Capital R") have taken credit for very many things the past two election cycles. Working and middle class Americans remembered that when they voted. How'd that work out for those "republicans", anyway? Do they now define "compromise" as "we hated it unanimously; it passed anyway; we'll take credit for it now"?

Posted by: Steve W. on February 12, 2009 at 12:23 PM | PERMALINK

This is why I liked Obama's comment during the press conference about what he had learned during the process.

I think he was joking when he said that knowing he would want some tax cuts in the mix, he should have left them out and let the Republicans take credit for adding them.

But given what Steve B is mentioned in this post, I think there was some merit in the suggestion. It would have given the Republicans more ammunition for attacking Obama, but might have gotten more of what he wanted and made them happier with the end product.

Posted by: tanstaafl on February 12, 2009 at 2:19 PM | PERMALINK

If this is a win, I'd hate to see a loss. -Diogenes

The last eight years was a loss. So yes, this is a win.

Posted by: doubtful on February 12, 2009 at 2:21 PM | PERMALINK




 

 

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