It's done: Congress sends $787 billion stimulus to Obama

McClatchy NewspapersFebruary 13, 2009 

WASHINGTON — Congress, voting largely along party lines, Friday voted to jolt the nation's struggling economy with a $787.2 billion stimulus package designed to provide quick tax relief and create or save 3.5 million jobs.

The Senate approved the package by a 60 to 38 vote, as 55 Democrats joined three moderate Republicans and two independents.

Sen. Edward Kennedy, D-Mass., didn't vote, and one of Minnesota's seats remains vacant. The final, deciding vote was cast by Sen. Sherrod Brown, D-Ohio, who'd returned to Washington late Friday after his mother's funeral.

Earlier in the day, the House of Representatives passed the plan, 246 to 183. Among those voting, all 176 Republicans and seven Democrats voted no.

The bill now goes to President Barack Obama, who's expected to sign it early next week.

Once he does, some of the money should start flowing quickly. The bill promises some relatively quick job creation by spending $27.5 billion to modernize roads and bridges, $16.4 billion for investments in high speed rail and transit and $53.6 billion to help states pay education expenses.

It also includes up to 33 weeks of additional jobless benefits in high unemployment states, as well an extra $25 a week in benefits; funds to help the poor and those with disabilities with health care costs; and payments of $250 to retirees, Supplemental Security Income recipients and veterans who get pensions or disability payments.

GOP critics were bitter, charging that the bill was dotted with favors to special interests that had no business in emergency legislation, and that it offered too few tax cuts.

They ridiculed one of the biggest provisions, Obama's signature "Making Work Pay" tax relief, which provides $400 to most taxpayers. The credit, estimated to cost $116.2 billion, should mean only $13 a week this year, assuming the plan begins in June, and $8 a week next year.

"Thirteen bucks a week isn't going to do a whole lot to get this economy going again," said House Republican Conference Chairman Mike Pence of Indiana.

Republicans also objected that congressional negotiators worked largely behind closed doors to cobble the bill together quickly this week, despite Obama's promises of transparency. And when copies of the 1,073 page, eight-inch thick bill became available only a few hours before the votes, it had changes scribbled in ink in the margins.

The mood among supporters was a combination of relief, euphoria — and confusion in the final hours.

The bill was pieced together only after some messy last-minute scrambling, as lawmakers pleaded Thursday to get more pet projects shoehorned into the measure. A provision was added that could give General Motors — already getting a $13.4 billion federal bailout — a $3.2 billion break that could lower future taxes.

Sens. Olympia Snowe and Susan Collins of Maine, Republicans whose votes were crucial to final Senate passage, sought and got an expanded tax break for small business.

Even the bill's Democratic defenders warned that the legislation wouldn't spark an instant economic turnaround. The nation has lost 3.6 million jobs since the recession began in December 2007, and the bill's supporters predict that the stimulus would allow the economy to recover almost an equal number of jobs, but not rapidly — nor would they be the same jobs.

Its backers said the bill would ease the recession's impact and perhaps allow the economy to revive sooner.

"The American people understand that the legislation we send to the president's desk will not solve this crisis overnight," said Senate Majority Leader Harry Reid of Nevada. "We cannot say for certain when this crisis will end, but we do know for certain that this is when recovery must begin."

The bill aims to provide stimulus in four general ways: Tax relief, investments in the future, immediate job creation and help for people struggling.

One of the biggest tax expenses is the $70 billion "patch" in the alternative minimum tax, so that about 26 million people won't be subject to the tax this year. House Minority Whip Eric Cantor, R-Va., disputed the impact of this provision, noting that it simply extends current policies rather than puts new money into anyone's pockets.

The Tax Policy Center, a joint project of the Brookings Institution and the Urban Institute, two respected center-left policy research organizations, agrees.

The other major break is the $400 "Making Work Pay" credit, which will phase out at $95,000 for single taxpayers and $190,000 for joint filers.

Other tax cuts are more targeted to boost specific industries or groups. The first $2,400 of jobless benefits this year won't be counted as taxable income. Most new car buyers can deduct state and local sales taxes on the purchase. First-time home buyers who purchase a home until Dec. 1 can get up to an $8,000 tax credit.

Short-term job creation is expected from the education and infrastructure spending. The $53.6 billion State Fiscal Stabilization Fund includes $40 billion for local school districts, which could use it for school modernization, teacher pay and other expenses.

Infrastructure spending includes $27.5 billion for rebuilding roads and bridges — half of which must be committed to projects within 120 days — and $19 billion for clean water and flood control projects.

The investments for the future are seen as ways of assuring that jobs will be created in later years. Some $30 billion would be spent on developing a new, more efficient power grid, advanced battery technology and other energy efficient measures. And the bill provides $20 billion in tax incentives for renewable energy over the next 10 years.

In addition, the measure contains more than $15 billion for scientific research. More than half would go to the National Institutes of Health for biomedical research to study Alzheimer's, Parkinson's, cancer and heart disease.

ON THE WEB

Stimulus details

Congressional Budget Office analysis of final bill

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McClatchy Newspapers 2009

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