The stimulus was the biggest middle-class tax cut in history

I was disappointed by some compromises made to pass the stimulus (the American Recovery and Reinvestment Act) in February 2009. I felt President Obama made too many concessions in the fruitless pursuit of Republican votes, and that too much of the cost went toward tax cuts that would be slower-acting and less stimulative than certain forms of government spending.

That said, the tax cuts in the stimulus will help tens of millions of American families, particularly those with working-class or middle-class incomes. Citizens for Tax Justice has calculated that "the major tax cuts enacted in the 2009 economic stimulus bill actually reduced federal income taxes for tax year 2009 for 98 percent of all working families and individuals." In terms of the number of Americans who benefited, the stimulus bill was the biggest tax cut in history.

In addition, "the estimated $282 billion in tax cuts [from the stimulus] over two years is more than either of the 2001-2002 or the 2004-2005 Bush tax cuts or the Kennedy or Reagan tax cuts." George W. Bush's tax cuts were more costly to the U.S. Treasury over a 10-year period, but as Anonymous Liberal noted last year,

The Bush tax cuts were skewed dramatically toward the wealthy. In 2004, 60% of the tax cuts went to the top 20 percent of income earners with over 25% going to the top 1% of income earners. Those numbers have increased since then as the cuts to the estate tax have taken effect.

Tomorrow is the deadline for most Americans to file their tax returns, and Republicans will try to harness the tea party movement's anger at what they view as excessive taxes and spending. However, many ordinary people may be shocked to learn how large their refunds are this year. According to the White House, "the average tax refund is up nearly 10 percent this year."

Democrats should not be afraid to vigorously defend the stimulus bill during this year's Congressional campaigns. I wish the recovery act had been larger and better targeted, but the bottom line is that Republicans voted against the largest ever middle-class tax cut.

The White House website has this Recovery Act Tax Savings Tool to help people find benefits to which they are entitled. The White House press office released this fact sheet with much more detailed information on April 12. Note: if you have already filed your taxes, you can amend them after April 15 to collect on any credits from the stimulus bill that you missed.

Braley, Michaud want "Buy American" provisions in jobs bill

Populist Caucus Chairman Bruce Braley (IA-01) and House Trade Working Group Chairman Mike Michaud (ME-02) wrote to House Speaker Nancy Pelosi and House Majority Leader Steny Hoyer today, urging them to make sure the upcoming jobs bill contains a strong "Buy American" provision. From a press release Braley's office issued:

"Recently, as America has suffered the worst economic recession since the Great Depression, unemployment has risen and is now around 10 percent," the letter reads. "We believe that the shipment of American jobs overseas is a factor in this rising unemployment.  If we are going to pass a strong job creation bill then it only makes sense to include strong Buy American provisions, to further ensure that the jobs created as a result of this legislation are created within the United States.

"We have an obligation to create jobs in America. While some would argue that Buy American is nothing more than a trade protectionist label, it is clear that these provisions would equate to greater investment, and greater job-creation, within the U.S.  In addition, Buy American provisions are perfectly legal under current trade agreements and many other nations use similar mechanisms to protect their domestic manufacturers.  Therefore, we feel that it is entirely appropriate that this language be included in any upcoming job-creation measure, and we believe that this provision is essential to creating and retaining American jobs.

The stimulus bill Congress approved in February contained "Buy American" language despite a massive corporate lobbying effort.

Speaking of provisions likely to be included in the jobs bill, making homes more energy efficient would produce huge collateral benefits, as A Siegel explains at the Get Energy Smart Now blog. Money that homeowners and business owners save on utility bills is money they can spend on other goods and services.

In his speech today, President Obama also mentioned aid to state and local governments in his speech today. That would help state legislators close gaps in the budgets for fiscal year 2011, which begins on July 1 in most states.

Republicans in Iowa (and presumably elsewhere) keep complaining about Democrats using federal transfers to balance the state budget, but they ignore the reality that deep cuts in state budgets are themselves a drag on the economy. State employee layoffs have a ripple effect in the private sector. The Center on Budget and Policy Priorities recently estimated that without additional federal fiscal relief, "states will have to take steps to eliminate deficits for state fiscal year 2011 that will likely take nearly a full percentage point off the Gross Domestic Product. That, in turn, could cost the economy 900,000 jobs next year."

There's more...

Some states in no hurry to spend stimulus road funds

The U.S. House Transportation and Infrastructure Committee has been keeping track of how states are spending the stimulus funds allocated for roads. On September 2 the committee released a report ranking the states according to how much of the American Recovery and Reinvestment Act funding for highways and bridges had been put to work as of July 31. This pdf file contains the state rankings. For each state, the chart shows the percentage of allocated funds for highway and bridge projects that had been put out to bid, were under contract, or were underway by the end of July. The top five states were Wyoming, Iowa, Tennessee, New Hampshire and Oklahoma.

The national average was to have about 40 percent of the stimulus road money under contract and 32 percent funding construction that had already begun by the end of the July. Only 11 states had put even 50 percent of their stimulus road funds to work by that time.

Yesterday's report from the House Transportation and Infrastructure Committee doesn't explain why some states have allocated their stimulus money faster than others. The states near the bottom of the list (Hawaii, Virginia, Delaware, Ohio and Massachusetts) hadn't even spent 20 percent of their stimulus road funds as of July 31. Perhaps they are slow to approve projects and bids, or hoarding the cash to help support their 2010 budgets. Whatever the reason, the point of the stimulus bill was to get money into the economy quickly.

There's more...

Cash for Clunkers ends, cash for appliances coming soon

The $3 billion "Cash for Clunkers" program officially ends today, having helped generate at least 625,000 new car sales. Hoping to repeat this success, Energy Secretary Steven Chu has announced that $300 million in stimulus money will go toward cash incentives for consumers to buy energy-efficient home appliances:

Beginning late this fall, the program authorizes rebates of $50 to $200 for purchases of high-efficiency household appliances. The money is part of the broader economic stimulus bill passed earlier this year. Program details will vary by state, and the Energy Dept. has set a deadline of Oct. 15 for states to file formal applications. The Energy Dept. expects the bulk of the $300 million to be awarded by the end of November. (Unlike the clunkers auto program, consumers won't have to trade in their old appliances.)

"These rebates will help families make the transition to more efficient appliances, making purchases that will directly stimulate the economy," Energy Secretary Steven Chu said in a statement announcing the plan. Only appliances covered by the Energy Star seal will qualify. In 2008, about 55% of newly produced major household appliances met those standards, which are set by the Energy Dept. and Environmental Protection Agency.

Replacing old appliances can significantly reduce a household's energy use and utility bills, so this seems like a good use of stimulus money. However, some analysts are skeptical that the new program will be as successful as "Cash for Clunkers":

"The cash-for-clunkers (program) had a discernible value proposition for the consumer, because he knows how much his (clunker) is worth," says [Sam] Darkatsh, the Raymond James analyst. "With appliances, there is no trade-in. You can walk into Home Depot and get a great deal on a home appliance any time you want one. Why would it drum up sales now?" Laura Champine, an analyst with Cowen & Co., agrees. "I'm not sure if it will be as powerful as cash for clunkers because there is something compelling about that $4,500 discount," she says. "Also, a new car is more fun than a new dishwasher. So I'm not sure if it will be as much of a driver, but any driver is welcome right now."

Share any relevant thoughts in this thread.

There's more...

Another $2 billion for Cash for Clunkers

President Barack Obama signed a bill on Friday allocating an additional $2 billion to the to the Car Allowance Rebate System, more commonly known as Cash for Clunkers. The money will come from the American Reinvestment and Recovery Act (the economic stimulus bill approved in February). The Senate approved the bill by a 60-37 vote on Thursday night.

I liked Senator Tom Harkin's idea to put income limits on this program, but the Senate needed to pass the same bill that cleared the House in order to keep Cash for Clunkers going during the summer recess. If the Senate had approved any amendments to the House bill, the funding would have been delayed until September.

The Senate vote went mostly along party lines, but four Democrats joined 33 Republicans in voting no: Claire McCaskill (who had been criticizing the program), Pat Leahy, Ben Nelson, and Mark Warner. Seven Republicans joined 53 Democrats in voting yes: Lamar Alexander, Kit Bond, Susan Collins, Bob Corker, Sam Brownback, Olympia Snowe, and George Voinovich.

I'm pleased to learn that most consumers who have taken advantage of this program have traded in a "clunker" for cars that get significantly better mileage. (Click here for lists of the most popular vehicles traded in and the most popular purchased with Cash for Clunkers vouchers.) The way Congress wrote the bill, people could have traded in SUVs and trucks for similar vehicles with only minimal improvements in fuel economy.

There's more...

Diaries

Advertise Blogads