CHN: House and Senate Pass Airline Bailout, Economic Stimulus Next

Lawmakers Still Responding to National Tragedy
Congress continues to work with the President to address the devastating terrorist attacks on the World Trade Center and Pentagon September 11. In addition to the $40 billion emergency supplemental bill agreed to by the House and Senate September 14, Congress last week approved $15 billion in aid to the airline industry, which was dealt a severe blow by the attacks.

Congress and the Administration are now focused on crafting a more comprehensive economic stimulus package in an attempt to reinvigorate the faltering economy. Many in the Republican party are pushing for more corporate relief, and measures such as a capital gains tax cut and a cut in the corporate income tax are on the table. For their part, most Democrats have joined leaders in the human needs community in insisting that any stimulus measure contain provisions that directly benefit those hardest hit by the turn in the economy – working families and the poor. In the aftermath of the attacks, there have been over 100,000 layoffs in the airline industry alone, while hotel employees and other service workers have been equally hard hit by the slump in travel and spending.

To stabilize the economy and effectively benefit a majority of Americans, anti-poverty advocates and their allies on the Hill argue that the economic stimulus package must include measures that can quickly provide relief to and boost the purchasing power of moderate- and low-income people. Items under consideration include expanded unemployment, health and food stamp benefits; payroll tax rebates for low-wage workers who do not pay income taxes, or rebates for those who did not benefit from this year’s tax legislation; an increase in the minimum wage; and emergency aid to states to provide crucial social services. Legislative language implementing an economic stimulus package will likely be agreed to in the next few weeks.

Meanwhile, lawmakers acknowledge that the teetering economy and emergency spending – along with increases for defense and education requested by President Bush before September 11 – are taking their toll on the federal budget. The White House Office of Management and Budget (OMB) reported that the fiscal year 2001 surplus has likely shrunk to $120 billion – less than the $160 billion estimated last month, and a significant decline from the $280 billion surplus projected earlier this year. Furthermore, the Congressional Budget Office (CBO) estimates that the surplus for fiscal year 2002, which begins October 1, will drop from the $176 billion projected last month to between $36 billion and $56 billion.

The tightening budget is hindering the passage of the 13 annual appropriations bills, forcing Congress to pass a continuing resolution (CR) to keep the government running from the beginning of the new fiscal year until October 16. In light of the terrorist attacks, Congress has abandoned earlier pledges not to dip into the Social Security fund to finance government operations, but money for non-defense discretionary programs for the upcoming fiscal year remains very tight. House and Senate Appropriators forwarded a bipartisan proposal to the White House, requesting a boost in total discretionary spending for fiscal year 2002 from the $661.3 billion allowed in this year’s budget resolution to $686 billion. The extra funds would accommodate $4 billion in increased education spending, $18.4 billion in new defense spending, and $2.2 billion in natural disaster aid. Thus far, the Administration has agreed to a $679 billion total, only accommodating the increase in defense spending.

Under current budget constraints, fiscal year 2002 funding levels for programs vital to low-income and vulnerable populations are uncertain at best. A House mark up of the Labor, Health and Human Services, and Education bill – which provides the bulk of federal funds for programs that serve low-income Americans and is also one of the most expensive and contentious annual spending bills – was originally scheduled for September 25 but has now been postponed.

Budget and Appropriations
tax policy