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Recovery Package in Full Debate

POSTED: January 23, 2009, 12:00 am

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The House of Representatives spent most of yesterday marking up the huge economic recovery package, officially titled “The American Recovery and Reinvestment  Act of 2009,” as debate continued over specific elements in the $850 billion legislative package. The focus of the bill is the infusion of dollars into the economy, through direct spending by the federal government or tax cuts and subsidies for the private sector, as a way to end the current recession.

The bill is the first major test for the Obama administration. President Obama made this economic recovery package a priority immediately after his historic win on November 4. He also urged Congress to bail out the automobile industry but there was fierce resistance on the Hill and that effort ended with the Bush administration deciding to dip into the TARP funds to aid General Motors and the Chrysler Corporation. Still, that minor setback did not deter Mr. Obama from insisting that his first priority as President would be to pass legislation to jumpstart the economy. Originally, the Obama transition team was hoping that the bill would be ready for President-elect Obama’s signature the day of his inauguration but it became clear that consensus could not be won on the Hill quick enough to meet that timeline. The new target is to have the legislation approved in time for the President to sign the bill before the President’s Day recess.

Republicans on the Hill are raising concerns that there is too much direct spending in the package without any real evidence that it will stimulate the economy. The House minority is supportive of greater tax cuts that the GOP insists will be more effective at slowing down the economic downturn. Democrats, for their part, have been pushing spending on transportation infrastructure, school buildings rehabilitation, and “green” jobs, areas that they see as ripe for creating new jobs. President Obama has indicated he expects 90% of the jobs created by the package to be in the private sector so there is some pressure on Democrats in the House to pass a bill that contains provisions sufficient to match the President’s expectations.

Guiding the tax provisions of the massive bill is House Ways and Means Committee Chairman Rep. Charles Rangel (D-NY). The veteran lawmaker has been supportive of tax cuts for the middle class and tax credits to provide incentives to the private sector to hire certain groups of workers. One such credit supported by Rep. Rangel would provide a subsidy to employers who hire young adults, age 16 to 24, who are out of school and out of work, so-called “disconnected youth,” and veterans. One of the growing concerns is the rising rate of teenage unemployment, as evidenced in the last three monthly employment Situation Summary reports released by the Bureau of Labor Statistics.

Republicans on the Ways and Means Committee did not weigh-in on the tax bill; choosing instead to make their concerns known to President Obama. Republican leaders are expecting to meet with the President to make their case for more tax cuts when they meet with Mr. Obama in the coming week.

The House Transportation and Infrastructure Committee released a report yesterday detailing projected spending on infrastructure projects and the numbers are fairly significant although members from both parties have expressed concern that the dollars are insufficient. The report provides a state-by-state breakdown for Ready-to-Go Highway and Bridge Projects, Clean Water State Revolving Fund, Fixed Guideway Modernization, Transit Capital Grants, and Highways and Bridges. As expected, larger states such as California, New York, Texas, Pennsylvania, Illinois and Florida fare well under the plan.

In the coming week the Senate will take up the measure and there is expected to be continued debate on the scope of the plan, its specific outlays and its projected impact. The bill will test President Obama’s commitment to move in a bipartisan fashion as Republicans, while in the minority, will certainly have a platform from which to raise objection and influence the public debate.

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