CHN: Economic Recovery Bill Passes in House and is Debated on the Senate Floor

Comparison Table of House and Senate Economic Recovery Bills from CHN (2/3/09)
The House passed an economic recovery bill close to the plan proposed by President Obama on January 28.  H.R. 1, the American Recovery and Reinvestment Act of 2009, weighs in at $819 billion, and directs a substantial amount of that total towards policies judged by economists to provide a powerful economic boost:  those targeted to low-income people who will spend the money quickly, aid to states to save jobs and services, and job-creating infrastructure projects.  Despite hopes of at least some degree of bipartisanship, the bill passed without a single Republican vote (House roll call vote).  Now debate on a fairly similar bill has begun in the Senate.  At least a couple of Republicans will be necessary for the bill to get the 60 votes needed in the Senate even if every Democrat votes for it, and a number of senators of both parties have expressed reservations.

The bill before the Senate is closer to $890 billion, because of the inclusion of the annual fix to protect mostly upper-middle income taxpayers from the Alternate Minimum Tax.  Still, the broad outlines as Senate debate began are comparable, with about $160 billion in aid to states to prevent Medicaid, education and other service cuts, significant funds for very basic assistance to low and moderate income people, and tax cuts similarly targeted to people with low to moderate incomes.  Both bills have billions in tax breaks and incentives for the private sector, especially to encourage investment in renewable energy, broadband, and health information systems, and also invest in repair, maintenance, retrofitting and construction of roads, bridges, public (and, more modestly, nonprofit) buildings, including low-income housing.

Nearly two-thirds of the funding in the House bill will be spent by the end of FY 2010; about 85 percent will be spent by the end of FY 2011, according to a Congressional Budget Office analysis.  This estimate should reassure critics who feared that the plan would not get money into the economy fast enough.  In fact, with unemployment likely to be high for several years, it is useful that economic activity will continue to be generated through 2011.

The final Senate bill will likely change somewhat, as votes on amendments are expected to continue through the week of February 2.  A first try by Senators Murray (D-WA) and Feinstein (D-WI) to add $25 billion in infrastructure spending came two votes shy of the 60 votes needed, with some senators opposing it because they wanted to cut other elements of the bill in order to make this addition.

The Obama Administration has sought a recovery bill that gets people to work quickly and prevents severe hardship while also making long-term investments.  For the Administration, an important example would be hiring people to improve the energy efficiency of low-income housing.  Both House and Senate bills include funding for this purpose, which would hire workers to carry out such retrofitting, alleviate hardship by reducing home energy costs, and invest in maintaining or increasing the supply of habitable low-income units.  Not all provisions in the legislation achieve all three purposes uniformly, but on balance the bills make significant strides in attaining these goals.

There were reports that Senators Collins (R-ME) and Nelson (D-NE) would offer an amendment to shrink the package down to about $650 billion by removing provisions that they did not believe would create jobs.  While effectiveness in job creation can be debated item by item, economists including Nobel Prize-winner Paul Krugman have argued that the current House and Senate bills are not big enough to provide the amount of stimulus needed.  A dramatic reduction would undermine the recovery plan’s capacity to turn the economy around.

If the Senate succeeds in passing a bill, leaders in the House and Senate in negotiation with the White House will craft a compromise, with hopes still high that there will be legislation for the President to sign before Congress leaves for the President’s Day recess (that is, by February 13).  Advocates are noting some significant differences.  The House, for example, makes the Child Tax Credit available to poor families starting with the first dollar of earnings; the Senate denies the Credit to families earning less than $6,000.  The House bill would help 12.2 million more children than the Senate plan.  With each day providing new and alarming news about job loss, hardship, and business failures, economists and human needs advocates alike have underscored the urgency of quick action to enact economic recovery legislation.

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