The venerable Oxford English Dictionary defines “stimulus” as “something that promotes activity, interest, or enthusiasm.” If, as appears almost certain, the federal government enacts legislation appropriating more than $800 billion in a so-called “stimulus package,” the next edition of Oxford might properly include further definitions for the already-overused term: “any massive federal spending program designed to funnel taxpayer monies into pet political projects; a term employed to disguise massive federal spending programs designed to funnel taxpayer monies into pet political projects, but labeled ‘stimulus’ in order to secure votes necessary for passage.”
Of course, as is par for the course in proposing and enacting modern federal legislation, congressional leaders have attached a high-sounding and misleading moniker to this latest and largest ever so-called “stimulus package.”
The legislation, which passed the House last week and the “senior” chamber Tuesday, is entitled “The American Recovery and Reinvestment Act of 2009.”
How clever be these members of Congress. They know you can never go wrong by including the word, “American” or “America,” in the title of any legislation, since there is then always the implication that anyone who votes against the bill is, of course, un-American.
When all is said and done according to the government’s own estimate, this spending measure will add more than a trillion dollars to our national debt which already tops $10.2 trillion.
Moreover, this appropriations vehicle comes on top of last year’s “Emergency Economic Stabilization Act” —- the so-called “bailout” —- and the now small, $152 billion 2008 “Economic Stimulus Act.” Thus does the true magnitude of the damage to the value of our currency and to the future economic health of our nation start to come into focus.
State and local government officials, including our own here in the Peach State, are already gleefully counting the billions they are slated to receive from Washington’s “reinvestment” largess. These are the same spendthrift state and local governments that have failed for decades to keep their own spending under control.
Throwing even more federal money their way simply rewards their irresponsibility, and further disguises the necessity for state and local governments to rein in their own spending. Some of the details of the “reinvestments” in the House’s version of the stimulus package are truly amazing. For example:
> A billion dollars will continue to subsidize the perennial money loser, Amtrak; $20 billion expands the already bloated food stamp program.
> About $2 billion is diverted from the wallets of hard-working Americans to subsidize childcare. Some $2.8 billion is slipped to global warming advocacy programs.
> $600 million will buy more and newer cars for government bureaucrats, along with $44 million to refurbish the Department of Agriculture, $50 million for the National Endowment for the Arts, and $150 million to spruce up the Smithsonian buildings.
> Another $650 million is earmarked for helping consumers convert analog TVs to digital (because the government earlier decided to halt analog television broadcasting).
There are minor differences in the House and Senate versions, but overall the amount of money spent and the amount of pork in each is outrageous and harmful; and besides, the House-Senate conference may very well add back in what the Senate took out but really just shifted around, in a typical example of congressional legerdemain.
When all the dust settles, the only thing this fiscal monstrosity will “stimulate” is making American citizens, businesses and state and local government even more dependent on Uncle Sam than before; even as we and our children and grandchildren are rendered the poorer.
The recovery package has tax breaks for families that send a child to college, purchase a new car, buy a first home or make the ones they own more energy efficient.
Millions of workers can expect to see about $13 extra in their weekly paychecks, starting around June, from a new $400 tax credit to be doled out through the rest of the year. Couples would get up to $800. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year.
The $1,000 child tax credit would be extended to more low-income families that don't make enough money to pay income taxes, and poor families with three or more children will get an expanded Earned Income Tax Credit. Middle-income and wealthy taxpayers will be spared from paying the Alternative Minimum Tax, which was designed 40 years ago to make sure wealthy taxpayers pay at least some tax, but was never indexed for inflation. Congress fixes it each year, usually in the fall.
First-time homebuyers who purchase their homes before Dec. 1 would be eligible for an $8,000 tax credit, and people who buy new cars before the end of the year can write off the sales taxes.
Homeowners who add energy-efficient windows, furnaces and air conditioners can get a tax credit to cover 30 percent of the costs, up to a total of $1,500. College students -- or their parents -- are eligible for tax credits of up to $2,500 to help pay tuition and related expenses in 2009 and 2010. Those receiving unemployment benefits this year wouldn't pay any federal income taxes on the first $2,400 they receive.
Many workers who lose their health insurance when they lose their jobs will find it cheaper to keep that coverage while they look for work.
Right now, most people working for medium and large employers can continue their coverage for 18 months under the COBRA program when they lose their job. It's expensive, often over $1,000 a month, because they pay the share of premiums once covered by their employer as well as their own share from the old group plan.
Under the stimulus package, the government will pick up 65 percent of the total cost of that premium for the first nine months. Lawmakers initially proposed to help workers from small companies, too, who don't generally qualify for COBRA coverage. But that fell through. The idea was to have Washington pay to extend Medicaid to them. COBRA applies to group plans at companies employing at least 20 people. The subsidies will be offered to those who lost their jobs from Sept. 1 to the end of this year.
Those who were put out of work after September but didn't elect to have COBRA coverage at the time will have 60 days to sign up. The plan offers $87 billion to help states administer Medicaid. That could slow or reverse some of the steps states have taken to cut the program.
Highways repaved for the first time in decades. Century-old waterlines dug up and replaced with new pipes. Aging bridges, stressed under the weight of today's SUVs, reinforced with fresh steel and concrete. But the $90 billion is a mere down payment on what's needed to repair and improve the country's physical backbone. And not all economists agree it's an effective way to add jobs in the long term, or stimulate the economy.
Homeowners looking to save energy, makers of solar panels and wind turbines and companies hoping to bring the electric grid into the computer age all stand to reap major benefits. The package contains more than $42 billion in energy-related investments from tax credits to homeowners to loan guarantees for renewable energy projects and direct government grants for makers of wind turbines and next-generation batteries.
There's a 30 percent tax credit of up to $1,500 for the purchase of a highly efficient residential air conditioners, heat pumps or furnaces. The credit also can be used by homeowners to replace leaky windows or put more insulation into the attic. About $300 million would go for rebates to get people to buy efficient appliances.
The package includes $20 billion aimed at "green" jobs to make wind turbines, solar panels and improve energy efficiency in schools and federal buildings. It includes $6 billion in loan guarantees for renewable energy projects as well as tax breaks or direct grants covering 30 percent of wind and solar energy investments. Another $5 billion is marked to help low-income homeowners make energy improvements.
About $11 billion goes to modernize and expand the nation's electric power grid and $2 billion to spur research into batteries for future electric cars.
A main goal of education spending in the stimulus bill is to help keep teachers on the job. Nearly 600,000 jobs in elementary and secondary schools could be eliminated by state budget cuts over the next three years, according to a study released this past week by the University of Washington. Fewer teachers means higher class sizes, something that districts are scrambling to prevent.
The stimulus sets up a $54 billion fund to help prevent or restore state budget cuts, of which $39 billion must go toward kindergarten through 12th grade and higher education. In addition, about $8 billion of the fund could be used for other priorities, including modernization and renovation of schools and colleges, though how much is unclear, because Congress decided not to specify a dollar figure.
The Education Department will distribute the money as quickly as it can over the next couple of years. And it adds $25 billion extra to No Child Left Behind and special education programs, which help pay teacher salaries, among other things. This money may go out much more slowly; states have five years to spend the dollars, and they have a history of spending them slowly. In fact, states don't spend all the money; they return nearly $100 million to the federal treasury every year. The stimulus bill also includes more than $4 billion for the Head Start and Early Head Start early education programs and for child care programs.
One thing about the president's $790 billion stimulus package is certain: It will jack up the federal debt.
Whether or not it succeeds in producing jobs and taming the recession, tomorrow's taxpayers will end up footing the bill. Forecasters expect the 2009 deficit -- for the budget year that began last Oct 1 -- to hit $1.6 trillion including new stimulus and bank-bailout spending. That's about three times last year's shortfall. The torrents of red ink are being fed by rising federal spending and falling tax revenues from hard-hit businesses and individuals.
The national debt -- the sum of all annual budget deficits -- stands at $10.7 trillion. Or about $36,000 for every man, woman and child in the U.S. Interest payments alone on the national debt will near $500 billion this year. It's already the fourth-largest federal expenditure, after Medicare-Medicaid, Social Security and defense. This will affect us all directly for years, as well as our children and possibly grandchildren, in higher taxes and probably reduced government services. It will also force continued government borrowing, increasingly from China, Japan, Britain, Saudi Arabia and other foreign creditors.
The package includes $9.2 billion for environmental projects at the Interior Department and the Environmental Protection Agency. The money would be used to shutter abandoned mines on public lands, to help local governments protect drinking water supplies, and to erect energy-efficient visitor centers at wildlife refuges and national parks.
The Interior Department estimates that its portion of the work would generate about 100,000 jobs over the next two years. Yet the plan will only make a dent in the backlog of cleanups facing the EPA and the long list of chores at the country's national parks, refuges and other public lands. It would be more like a down payment. When it comes to national parks, the plan sets aside $735 million for road repairs and maintenance. But that's a fraction of the $9 billion worth of work waiting for funding. At EPA, the payout is $7.2 billion. The bulk of the money will help local communities and states repair and improve drinking water systems and fund projects that protect bays, rivers and other waterways used as sources of drinking water. The rest of EPA's cut -- $800 million -- will be used to clean up leaky gasoline storage tanks and the nation's hazardous waste sites.
The stimulus bill includes plenty of green for those wearing blue. The compromise bill doles out more than $3.7 billion for police programs, much of which is set aside for hiring new officers. The law allocates $2 billion for the Byrne Justice Assistance Grant, a program that has funded drug task forces and things such as prisoner rehabilitation and after-school programs. An additional $1 billion is set aside to hire local police under the Community Oriented Policing Services program. The program, known as COPS grants, paid the salaries of many local police officers and was a "modest contributor" to the decline in crime in the 1990s, according to a 2005 government oversight report.
Both programs had all been eliminated during the Bush administration.
The bill also includes $225 million for general criminal justice grants for things such as youth mentoring programs, $225 million for Indian tribe law enforcement, $125 million for police in rural areas, $100 million for victims of crimes, $50 million to fight Internet crimes against children and $40 million in grants for law enforcement along the Mexican border.
The maximum Pell Grant, which helps the lowest-income students attend college, would increase from $4,731 currently to $5,350 starting July 1 and $5,550 in 2010-2011. That would cover three-quarters of the average cost of a four-year college. An extra 800,000 students, or about 7 million, would now get Pell funding. The stimulus also increases the tuition tax credit to $2,500 and makes it 40 percent refundable, so families who don't earn enough to pay income tax could still get up to $1,000 in extra tuition help. Computer expenses will now be an allowable expense for 529 college savings plans.
The final package cut $6 billion the House wanted to spend to kick-start building projects on college campuses. But parts of the $54 billion state stabilization fund -- with $39 billion set aside for education -- can be used for modernizing facilities. There's also an estimated $15 billion for scientific research, much of which will go to universities. Funding for the National Institutes of Health includes $1.5 billion set aside for university research facilities.
Altogether, the package spends an estimated $32 billion on higher education.
More than 37 million Americans live in poverty, and the vast majority of them are in line for extra help under the giant stimulus package. Millions more could be kept from slipping into poverty by the economic lifeline.
People who get food stamps -- 30 million and growing -- will get more. People drawing unemployment checks -- nearly 5 million and growing -- would get an extra $25, and keep those checks coming longer. People who get Supplemental Security Income -- 7 million poor Americans who are elderly, blind or disabled -- would get one-time extra payments of $250.
Many low-income Americans also are likely to benefit from a trifecta of tax credits: expansions to the existing Child Tax Credit and Earned Income Tax Credit, and a new refundable tax credit for workers. Taken together, the three credits are expected to keep more than 2 million Americans from falling into poverty, including more than 800,000 children, according to the private Center on Budget and Policy Priorities.
The package also includes a $3 billion emergency fund to provide temporary assistance to needy families. In addition, cash-strapped states will get an infusion of $87 billion for Medicaid, the government health program for poor people, and that should help them avoid cutting off benefits to the needy.