CHN: Historic Vote for Economic Recovery; President Signs American Recovery and Reinvestment Act

Friday February 13th turned out to be an auspicious day for the nation when both the House and Senate voted for final enactment of the American Recovery and Reinvestment Act of 2009.  The bill provides $787 billion to save or create an estimated 3.5 million jobs, badly needed as the number unemployed rose to 11.6 million in January.  The President signed the bill into law on February 17.  Click here for more detail: Chart of Provisions that Promote Shared Recovery in the American Recovery and Reinvestment Act from CHN (2/17/09)
The House vote was 246-183, with no Republicans voting in favor and 7 Democrats opposed.  (House roll call vote)  Final enactment in the Senate was achieved with exactly the 60 votes needed, with Senators Snowe (R-ME), Collins (R-ME) and Specter (R-PA) joining 57 Democrats to vote yes.  Thirty-eight voted no, all Republicans.  (Senate roll call vote)  Senator Kennedy (D-MA), who interrupted his recovery from brain cancer treatment to cast an earlier crucial vote to move the legislation forward, missed this vote when it was clear the needed 60 votes were secure.

The legislation takes the advice of economists who urged spending to provide income to low-income people, to prevent layoffs and service cuts in states, and to invest in building or rebuilding infrastructure.  All of these areas are seen as producing the biggest economic boost and the most jobs.  The new law provides hundreds of billions in aid to states to prevent cuts in Medicaid, education, and other vital services.  It invests in school and road repair, will dramatically upgrade the energy efficiency of public buildings and low-income homes, and modernizes health care information systems, a necessary step in building a more effective health care system.

Of particular importance, the legislation alleviates hardships weighing heavily on millions of families as the recession deepens.  Among the assistance provided, for the most part over a two-year period:

      $20 billion in increased food stamp aid (recently renamed the Supplemental Nutrition Assistance Program, or SNAP), more WIC and school lunch funding ,and increased emergency food aid;


      $40 billion in increased Unemployment Insurance benefits (both extending benefits for those who exhaust 26 weeks of state UI, raising benefits by $25 a week, and providing incentives to states to cover certain jobless workers (disproportionately low-income) now ineligible;


      Nearly $25 billion in subsidies to help unemployed people retain their health insurance through their previous employer’s group plan;


      More than $23 billion in tax credits available to low-income people even if their earnings are too low to owe federal income taxes, including significant increases in the Child Tax Credit and Earned Income Tax Credit, and an improved American Opportunity Tax Credit paying up to $2,500 a year towards four years of college education.  In addition, the new Making Work Pay credit will provide up to $400 per individual or $800 for joint filers, and will also be at least partly available to people with earnings too low to owe federal income taxes (the total cost of this credit is estimated at $116.2 billion);


      $14.4 billion for a one-time payment of $250 for recipients of Supplemental Security Income (SSI), Social Security, and other retirement programs;


      $1 billion to preserve state capacity to collect child support;


    $5 billion to allow states to respond to rising poverty by increasing aid through Temporary Assistance for Needy Families (TANF), the public assistance program whose block grant funding has not increased since 1996, the year it was created.

In addition, billions of dollars are provided to renovate low-income housing and other community facilities, help nonprofits provide services and renovate buildings, prevent homelessness, increase funds for subsidized child care and Head Start, provide job training and post-secondary education (increasing Pell Grants and Work-Study), including training and jobs for youth, and expanded medical care and disease prevention.  Many of the service expansions have been long sought and are urgently needed, especially after years of cuts and rising need have severely undermined capacity.

The legislation’s final passage depended on a deal to assure the votes of the three Republican senators (Snowe and Collins of Maine, and Specter of Pennsylvania).  Senator Collins worked with some Democrats, notably Senator Nelson (D-NE), to push for reductions in state aid not dedicated to Medicaid.  Their efforts led to a total of $53.6 billion in a State Fiscal Stabilization Fund, less than the $79 billion favored by the House (and by the Senate Appropriations Committee).  Many of the cuts they sought came out of education funding.  They also insisted on some cuts in infrastructure investments.  At an earlier point, the Senate agreed to add $70 billion for the annual and costly “patch” to prevent the Alternative Minimum Tax from increasing federal income taxes for mostly upper middle-income taxpayers.  Economists generally agreed that this provision was not effective as economic stimulus.  By adding this item and cutting other more effective measures to reduce the overall size of the package below what the House and Senate had previously agreed to, the final deal provides less stimulus than the bills earlier passed in the House and Senate.  But it passed.  Now the work of quick implementation begins.  Advocates are organizing to ensure that some of the jobs created go to low-income workers, and that the education, training, and community-rebuilding opportunities help poor people and communities to make genuine progress.

For job creation estimates by state:  Click here.

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