Congress Takes Up Massive Economic Bill

Last Week the new House of Representatives began focusing on the huge economic recovery package, officially titled “The American Recovery and Reinvestment Act of 2009.” Debate continues over specific elements in the $850 billion legislative package.

The bill is the first major domestic test for the Obama administration. 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. President Obama made this economic recovery package a priority immediately after his historic election victory. As President-elect, Obama 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. That minor auto industry setback, apparently has not deterred Mr. Obama from insisting that his first priority as President is to pass legislation to jump start 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 a consensus could not be reached on the Hill in time 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.

TimothyJ

Congressman Charles Rangel

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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. 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. Also this coming week, the Senate will take up the issue of America's crumbling infrastructure. On Friday the House Transportation and Infrastructure Committee released a report 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, 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. The measure is expected to garner a very spirited 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.