Can Stimulus Stimulate without Stimulation?

On Wednesday, January 28, 2009, I opposed H.R.1, the so-called economic “stimulus” package. If this bill stimulates anything, it will be the growth of the federal bureaucracy. Never have I seen a bill that invites more waste of taxpayer dollars than the bill that passed the House. Like we saw with the bailouts in October, nothing good comes from 700 page bills written overnight by one person.

It is true that the President has called for bipartisanship in crafting this package. It is true that the Democrats increased their majorities in the House and Senate during the 2008 elections. It is also true that if the Democrats believe their bill is stimulus, they could – and it appears they will – pass their bill with no Republican input whatsoever. And, the idea that Republicans obstructed anything could not be further from the truth since Pelosi had more than enough Democrats to pass the bill without our input – which she did. Though the media widely reported the President’s visit to the Republican Conference as an effort reach a bipartisan consensus, he rejected every single idea proposed to him during the meeting – which is certainly well within his prerogative. Bipartisanship, however, is not about just listening; it is about reaching a consensus between two parties, something Pelosi was not interested in when she included abortion/contraceptive funding in the first version of her stimulus bill. 

The American people are hurting. We cannot continue to shovel trillions of dollars out of the window of a 90-story building and expect it to get to the people who need it the most. I agree with the President’s National Economic Council Director, Larry Summers, who said early on that any stimulus must be, “timely, targeted, and temporary.” This bill is not timely; most of the spending (which is wasteful) does not occur for another two years at the earliest. This bill is not targeted; for every dollar in this bill that goes to something that could possibly stimulate the economy, there are five dollars going to pet projects with no stimulative effect. This bill is surely not temporary; it creates new permanent entitlement programs that are unnecessary and will create a new baseline for future federal spending. Alice Rivlin, a Senior Fellow at the Brookings Institution, the first Director of the Congressional Budget Office, and President Clinton’s Director of the Office of Management and Budget, was correct in stating that long-term spending “should not be put together hastily and lumped in with the anti-recession package.” Referring to the massive spending in the bill, Rivlin said there is a risk that “money will be wasted because the investment elements were not carefully crafted.” She later admitted that the spending in the bill “will not create many jobs right away.”

If it Oinks like a Pig, Tastes like Bacon, and is Smothered in BBQ Sauce, It’s most likely Pork
When President Obama announced in November that he wanted an economic stimulus to be ready by President’s Day, he identified several priorities. He said it should have no special interest pork; this bill is almost entirely special interest pork. He said it should stimulate (i.e. fast-working) the economy; 2/3 of the $1 trillion in this bill does not take effect until 2011 at the earliest. He said it should create jobs through shovel-ready transportation and infrastructure projects; this bill devotes less than 10% of the $1 trillion to transportation and infrastructure projects. He said it would create 3 or 4 million new jobs; when asked whether this bill would create jobs, the Deputy Chief of Staff of the Joint Congressional Economic Committee, Thomas Barthold, admitted that he could not guarantee that one job would be created by the bill.  

That is not to say that everything included in this package is bad on its face, but if we are talking about an emergency stimulus that is a “must-pass” piece of legislation to revive our economy, shouldn’t we cut the fat? And, after Pelosi praised the inclusion of hundreds of millions of dollars for contraception and abortion on national television, the public outcry forced the President to call Pelosi to tell her to take it out.

This bill, quite frankly, was an attempt to sneak hundreds of billions of dollars in pork into an “emergency” bill under the guise of “stimulus.” The bill, which has 11,391 so-called “vitally-important” pork projects, includes:
• $300,000,000,000 to bailout state governments
• $136,000,000,000 to create no less than 32 new federal government programs
• $6,700,000,000 to renovate and improve federal buildings
$6,000,000,000 to colleges and universities that already have billion dollar endowments
• $4,190,000,000 for a housing slush fund for ACORN and similar groups under the guise of “neighborhood stabilization activities”
• $4,000,000,000 to “develop rural communities”
• $2,800,000,000 to expand broadband
• $2,400,000,000 for a carbon capture program
• $2,250,000,000 for national parks which  is equal to the entire annual budget of the National Park Service
• $2,000,000,000 for child care subsidies
• $2,000,000,000 for non-specific “other activities”
• $1,000,000,000 for Amtrak (which hasn’t turned a profit since its inception 4 decades ago)
• $1,000,000,000 for periodic censuses
• $800,000,000 to clean up Superfund sites
• $650,000,000 for DTV transition coupons
• $600,000,000 to replace older vehicles for federal bureaucrats
• $500,000,000 for the Bureau of Reclamation
• $426,000,000 to construct facilities at the Centers for Disease Control and Prevention
• $400,000,000 for climate change research
• $335,000,000 to treat and prevent STDs
• $200,000,000 to repair the grass on the National Mall (including $21 million for sod)
• $88,000,000 for the General Services Administration to cover moving costs and furniture
• $50,000,000 for the National Endowment for the Arts
• $44,000,000 for repairs to the U.S. Dept. of Agriculture headquarters in D.C.
• $2,500,000 for a duck pond in California
• $750,000 for a skateboard park in Minnesota
• $200,000 for a dog park in California
• Money for a mob museum in Nevada
• Money for California winemakers
• Money for a basketball court in Ohio
• Money for snowmaking in Minnesota
• Money for a prostitute rehab program
• Money for traffic video cameras
• Provisions protecting Miami yacht-repair companies from paying for workers’ compensation

If these projects are worthy, they should be considered in the regular budget and appropriations process and not buried deep in a massive 700 page “emergency” economic “stimulus” bill. Instead of considering these controversial, non-stimulus items during the normal legislative process, Pelosi sheepishly smuggled the most egregious pork projects into the bill. If she truly believed money for contraception and abortions were stimulating, she should have kept them in. After speaking to the President, however, she flipped her script.

A Frantic Feeding Frenzy
I have been a member of Congress since 2005 and I may not be able to do justice as to what the scene on Capitol Hill was like in the run up to the vote as special interest groups swarmed the Hill with their hands out asking for pork. The following analogies might help you visualize the scene:
• It was like Exodus when the crops of Egypt are plagued by locusts. 
• It was like a scene out of Alfred Hitchcock’s “The Birds.”
• It was like shoppers on Black Friday trying to get a Wii or Playstation 3.
• It was like a Discovery Channel documentary where the guy throws a piece of raw meat into the Amazon River filled with Piranhas.
• It was like people impatiently clamoring for beads at Mardi Gras.

Republican Amendments Defeated in Committee
Ways & Means Committee
• Reduce the 10% and 15 % individual income tax brackets to 5% and 10% in for ‘09 and ‘10
• Add an above-the-line deduction for health insurance premiums
• Exempt unemployment benefits from income taxation in ‘08 and ‘09
• Make permanent the current dividends and capital gains tax rates and index the latter for inflation
• Add a GED/training requirement for those getting extended unemployment benefits
• Prohibiting Medicare from using comparative effectiveness research to restrict access
• Extending the homebuyer tax credit through ’09, allow it to be claimed by anyone (as opposed to first time homebuyers) purchasing a primary residence, and require buyers to have at least 5% down payment to get the credit
• Increase to $5,000 the cap on tax credits for individuals purchasing energy efficient property (windows, furnaces, etc.)
• Allows seniors to opt out of Part A of Medicare
• Alternative Minimum Tax (AMT) Patch for ‘09

Energy & Commerce Committee
• Allow physicians to avoid a 21 percent cut in payment for the Medicare patients they serve
• Prevent individuals who have an annual income of more than $100,000 and assets over $1 million dollars from receiving a subsidy for COBRA premium assistance. This amendment would ensure that the taxpayers wouldn’t have to pay the uninsured health insurance premiums for millionaires
• Provide premium assistance for persons in the Medicaid program to buy private insurance
• Establish an income test for individuals to buy into Medicaid. The amendment would prevent anyone who has an income above $1 million to qualify for the Medicaid program that is paid for with tax-payer dollars
• Require all hospitals accepting Medicaid payments to publicly disclose the price charged to uninsured or other self-pay patients
• Require all applicants for Medicaid to show proof of identity. This amendment would ensure that taxpayer dollars are not spent on those who are not qualified to be on the Medicaid program
• Make zero-emission energy systems available for federal loan guarantees. This would allow nuclear power, a major source of readily-available energy which emits zero carbon dioxide, to qualify for loan guarantees alongside various other renewable energy projects such as wind and solar
• Make carbon capture and storage projects available for federal loan guarantees

Appropriations Committee
• Strike all new programs created in the bill – funding that does not have the ability to be spent in the short term
• Strike the creation of a “slush fund” that would let agencies spend leftover stimulus funding without Congressional approval or public scrutiny
• require federal agencies to certify that they will use stimulus funds to add to – not replace – existing project funds already in federal pipelines to ensure that the stimulus funds will have an immediate effect on the economy
• withhold half the funds in the stimulus bill until expenditure plans are submitted to the Committee that: 1) explain exactly how dollars will be spent; (2) align funding to results; and (3) certify oversight measures required by the bill are in place
• Apply the Democrat majority's PAYGO rule to the stimulus bill, effectively requiring that all direct entitlement spending be deficit neutral.  It prohibits any provision in the bill that provides new or increased entitlement spending from taking effect until Congress enacts a bill to provide the corresponding offsets
• Prohibit stimulus funds from being used to administer or enforce an increase in tax rates
• Extend the authorization of E-Verify to ensure that all new jobs created will go to American citizens and those lawfully in our country

Republican Substitute Amendment Defeated on the House Floor
• An amendment to strike the Pelosi Stimulus entirely and substitute: 1) income tax rate deductions for bottom two income tax brackets; 2) alternative minimum tax relief; 3) small business deduction; 4) bonus depreciation; 5) small business expensing; 6) expanded carryback of net operating losses; 7) improved home buyer credit; 8) unemployment benefit tax exemption; 9) health insurance premium deduction; 10) repeal of 3 percent withholdings requirement for government contractors; 11) extension of unemployment benefits; and a Sense of Congress against tax increases to offset outlays.

Real Stimulus: cash transfers and new entitlements or small business and individual tax cuts?
I would like to enclose in this e-newsletter a re-cap of the economic stimulus plan I co-sponsored which would: provide families with tax relief to spend as they choose; provide small businesses with tax relief to retain (or hire new) employees and expand their businesses; and lower the tax burdens on corporations who face the 2nd highest tax burden in the industrialized world and are under pressure to keep jobs in America. This bill has not 1 penny of pork and includes a provision cutting non-defense/veterans discretionary spending across the board by 1% for FY ’09. You can read the bill at: http://www.govtrack.us/congress/billtext.xpd?bill=h111-470

H.R. 470: The Economic Recovery and Middle-Class Tax Relief Act

Tax Relief for Working Families:
• Provides for a permanent across the board income tax cut of 5%
• Increases the child tax credit from $1,000 to $5,000
• Makes all withdrawals from retirement accounts penalty free and tax free during 2009
• Permanently repeals the distribution requirements on retirement accounts
• Makes permanent the current lower capital gains/dividends tax rate of 15%
• Permanently repeals the Alternative Minimum Tax (AMT)
• Increases the tax deduction for interest on student loans and the tax deduction for qualified higher education expenses by 50%, and increases the number of individuals and families eligible to claim the full deduction

Tax Relief for American Businesses:
• Cuts the top corporate tax rate from 35% to 25%
• Allows all businesses to immediately expense – or fully deduct on their returns – the costs of assets (including buildings) they purchase for their business in the year that they buy such assets (“Section 179” expensing)
• Extends the carryback period for net operating losses from two to seven years
• Makes the Research and Development tax credit permanent
• Allows corporations to benefit from the 15% capital gains rate
• Ends the capital gains tax on inflation by indexing the cost basis used when calculating the capital gains tax on assets acquired before the end of 2009
 
I am honored to represent the 24th District of Texas, and appreciate your interest in my e-newsletter.  Please contact my District or DC office with any further questions you may have or visit my website at www.marchant.house.gov.