Light Up The Phones!
Call your Senators toll-free at 1-866-544-7573 and demand immediate passage of the American Recovery and Reinvestment Act.
OurFuture.org’s Bernie Horn, “Stand Up and Fight!”: “Here in Washington, D.C., the word on the street is that the Right is killing us with phone calls to Congress. One congressperson said the calls are running 100 to 1 against the Obama economic recovery plan. The legislation is now on the Senate floor. If Senators perceive that Americans side with Obama in this fight, that will strengthen the power of progressives in the debate and we’ll get a good bill. If, on the other hand, Senators are feeling the heat from conservatives, then our advocates will be weakened and we’ll get a lousy bill. That’s just the way things go on Capitol Hill. Those who worked for the election of Barack Obama and are currently sitting on the sidelines waiting to see how his economic recovery bill turns out — it’s time to stop waiting. Stand up and fight!”
Fact-esque (via The Sideshow): “It’s the Superbowl of Activism and We’re Losing Big … Enemies of the stimulus package are outcalling the supporters of economic recovery by enormous numbers … Go through your email lists – think of people to ask to make a call and follow-up with them. Consider this a warm-up for the coming health care battle, which will make this fight look like a poolside nap on a summer day.”
This glum scenario leads me to argue that this fiscal package is a good start, but only a start. Action should be swift, but expectations should be low. People should accept the possibility that the slump will go on for much longer than “several months.” That the budget will not return toward balance any time soon. And that further significant steps will be required, and perhaps quite quickly, as the economy continues to unravel.
The administration and Congress should not waste time dickering over the details of this package. Rather, they should enact it quickly, get things moving, and then come back to discuss the next steps. In my view, the crisis isn’t going away, and we are going to be thinking about it and dealing with it for many months, even years, into the future.
DailyKos’ BarbinMD: “a cadre of unions and progressive groups are ‘putting Senators on notice,’ with an ad buy … targeting Republican Senators for their vote on Barack Obama’s American Recovery and Reinvestment Plan, set to be debated this week in the U.S. Senate. The ads, running on both radio and television, are aimed at Richard Lugar (IN), Kit Bond (MO), Mel Martiniez (FL), Jim Bunning (KY), and Richard Burr (NC).”
Check out the Americans United For Change ad below:
Poll Watch: People Want The Bill To Pass. With Changes. But What Changes?
Watch for conservatives to crow about this new Gallup poll. “A strong majority of Americans (75%) want Congress to pass some version of President Obama’s economic stimulus plan, but this group is split down the middle on whether it should be passed as is or with major changes.”
Conservatives will say only 38% want is passed as is. BUT they should not be allowed to assume all that want changes are conservatives. 43% of Republicans want passage with major changes, but so do 30% of Democrats. Change could be more infrastructure spending or more business tax cuts. Such questions were not asked in the poll.
Further, all the so-called “pork” only amount to 1 percent of the bill. Not exactly “major changes.”
Most importantly, what’s indisputable is that 75% want government action to fix the economy. Only 17% say reject any bill.
UPDATE: FiveThirtyEight analyzes all the polling: “…there is some evidence … that the stimulus has become less popular. There is no evidence … that the stimulus has become unpopular; on the contrary, the preponderance of polling evidence suggests it remains a course of action that most of the public likes.”
Amendments On Tap
CQ Politics lays out the amendment landscape:
The first amendment scheduled for debate is a proposal from Patty Murray, D‑Wash., and Dianne Feinstein, D-Calif., that would boost the bill’s highway funding from $27 billion to $40 billion and its transit funding from $8.4 billion to $13.4 billion.
John Ensign, R-Nev., is leading an effort, backed by many business groups, to temporarily reduce the tax rate that corporations pay when they repatriate earnings from overseas. The language in his bill is expected to be similar to a 2004 temporary repatriation holiday that won the votes of 20 Democrats who are still in the Senate.
Democratic opponents, led by Carl Levin of Michigan and Byron L. Dorgan of North Dakota, say the provision would encourage companies to move abroad.
Budget Chairman Kent Conrad, D-N.D., said he is talking with senators about an amendment that would shift about $50 billion in the bill, mostly toward programs to address the struggling housing market.
Conrad said some of that funding would likely go to the Federal Deposit Insurance Corporation to renegotiate mortgages, as well as to expanding a refundable tax credit for homebuyers. Some Republicans want to expand that credit to as much as $15,000, but Conrad said that may be too expensive.
Some lawmakers want more radical surgery. Mel Martinez, R-Fla., is floating a $713 billion alternative package that focuses on tax cuts but, unlike the House Republican substitute offered last week, does include some spending. “There’s a nucleus of Republicans who realize the need for economic stimulus,” Martinez said.
His plan would temporarily cut the employees’ share of the payroll tax from 6.2 percent to 3.1 percent and cut the corporate tax rate from 35 percent to 25 percent. It would also increase a tax credit for home purchases to $15,000 for all homebuyers and reduce the top tax rate to 25 percent for small-business owners who file under the individual section of the tax code.
Susan Collins, R-Maine, said she was working with Ben Nelson, D-Neb., on amendments that would yield a bill of about $650 billion by deleting provisions that would not create jobs.
“We’re still in the midst of that process,” she said after several weekend discussions with Nelson. “My goal is to come up with a more targeted package. We’re not there yet. We’re still working.”
And Nelson, citing $1.5 billion for NASA as an example, said too much of the bill was not stimulative. “I can’t support the bill that’s there,” he said.
Republican amendments will seek to lower mortgage rates and to cut income tax rates for the bottom two brackets. Senate Minority Leader Mitch McConnell (R-Ky.) said one target would be a “Buy American” provision that critics warn could spark a global trade war. Republicans also strongly oppose the hefty state aid portion of the bill that would help cash-strapped state and local governments to meet soaring Medicaid, education and other public-service costs.
Democrats also will seek changes to the bill. Sens. Barbara Boxer (D-Calif.) and John Ensign (R-Nev.) want to add tax changes to allow companies to repatriate offshore profits. Sen. Ben Nelson (D-Neb.) and Sen. Susan Collins (R-Maine) are collaborating on an amendment that would cut the overall package by about $200 billion, through the elimination of various non-stimulative provisions.
And Sens. Russell Feingold (D-Wis.) and John McCain (R-Ariz.) will attempt to secure their long-sought earmark reform legislation by attaching it to the must-pass bill.
New York Senator Charles Schumer is pushing to add another $6.5 billion for mass transit to the $819 billion U.S. economic stimulus package, calling buses, subways and trains the “lifeblood” of the nation’s biggest city.
The Democrat’s amendment to the bill would increase funding to $14.9 billion from $8.4 billion, including $2 billion for capital transportation needs, $2 billion for railways and $2.5 billion for new transit projects.
W. Post reports throws cold water on the proposed tax break for multinationals: “A Senate committee has launched an investigation into potential abuses of a 2004 law that granted a one-time tax holiday to multinational corporations returning foreign earnings to the United States. The probe is intended to dampen enthusiasm for tucking a similar provision into the Senate’s $884 billion economic stimulus package. Sen. Carl M. Levin (D-Mich.), chairman of the Senate permanent subcommittee on investigations, said he has instructed the panel to determine whether companies that took advantage of the tax holiday used the cash to create jobs, as Congress had intended, or used it for other purposes, such as repurchasing their own stock, as one study suggests.”
W. Post reports the President is pressing congressional leaders to strip out anything that looks like pork: “Later in the day, Obama hosted the Democratic congressional leadership for an hour-long West Wing meeting to discuss the bill’s status in the Senate … two Democratic sources with knowledge of the meeting said the president took a blunt tone with the lawmakers, urging them to drop whatever needs to be cut from the bill to gain bipartisan support and to pass Congress soon. One source said Obama appeared to be frustrated by the public perception that the recovery bill was becoming laden with partisan pet projects.”
USA Today puts negative spin on minor differences in job estimates.
What’s the GOP Strategy?
Chances are, though, that any attempt to stop the bill by filibuster would fall short. Democrats won’t have to sway more than one or two Republicans to move ahead with the legislation. Already, Senate Republicans are trying a different and less obstructive strategy than that of their House counterparts. Sure, McConnell is talking tough, but he apparently realizes the “all tax cuts, all the time” angle the House GOP pushed won’t fly. Instead of simply demanding lower taxes, now and forever, the Senate Republicans plan to focus on propping up housing prices through the stimulus bill … That plan might put the country back on a path for another housing bubble, but it probably sounds a lot more attractive to voters — or, at least, voters with mortgages — than, say, cutting business taxes…
The Senate GOP hasn’t yet, and probably won’t, draw a line in the sand, the way House Republican leader John Boehner did last week, telling his flock to vote against the bill just hours before Obama went to the Capitol to meet with them about it. Depending on exactly what’s in the final product, Senate Republicans could even learn to love the price. “The bottom line is a problem because of the way it’s being spent,” one GOP aide said. “If the bottom line creates jobs and gets us out of this economic mess and then generates tax revenue, that’s one thing. If it’s just spending money on a bunch of crap, it’s another.” What might determine how many Republicans vote for the bill in the end is what the definition of “a bunch of crap” is. The White House has about two weeks to fight that one out.
And about those House Republicans, the ones who are still crowing about last week’s shutout: Many of them may wind up flipping too.
Will Tax Cuts Work?
In tough economic times, consumers and businesses typically pay down debt and save money in case problems grow worse. That’s rational behavior and one reason why consumer spending has plunged. Usually, consumption drives about two thirds of U.S. economic activity. If people are saving, they’re not spending, and the economy contracts.
“If people want to save, giving them money will not force them to spend it,” Williams said.
To counter this, the Senate measure would put more money into people’s paychecks in small amounts that would be more likely to be spent than saved. Academic research shows that small increases in paychecks are viewed as “spendable” income, while larger lump sums are viewed as wealth to be saved.
The legislation would reduce taxes withheld from paychecks. This involves a refundable tax credit worth up to $500 for single filers and $1,000 for joint filers over one year.
Other tax measures in the Senate bill are designed to support poorer Americans who presumably would spend, not save, the money. These include expanding the earned income tax credit and the child tax credit. These wouldn’t immediately stimulate the economy since they’re claimed on tax forms, and the expansion would apply to the 2009 tax year.
The Senate bill also includes a number of tax provisions designed to free up cash for businesses, but how well they’d work is in dispute. Many of these provisions were sought by the U.S. Chamber of Commerce, which thinks that the Senate effort isn’t sufficient.
McClatchy also reports that a Chamber of Commerce proposed tax break would benefit a “homebuilder that’s under federal investigation and has left starter home communities in Charlotte, N.C., struggling with foreclosures.”
Some Liberals Still Pushing For a Bigger Bill
NYT’s Bob Herbert pushes for more infrastructure investment: ” When you juxtapose this tremendous national need with the wholesale destruction of employment that has occurred over the past several months (and that is expected to continue for some time), you have to wonder why President Obama and Congressional leaders are not moving with extraordinary quickness to put together an infrastructure investment program that is both vast and visionary. Instead, we have infrastructure spending in the Democrats’ proposed stimulus package that, while admirable, is far too meager to have much of an impact on the nation’s overall infrastructure requirements or the demand for the creation of jobs.”
Arianna Huffington rounds up concerns that the package should be bigger from Van Jones, Joseph Stiglitz, Jeffrey Sacks and Rick Levin.
DailyKos’ MeteorBlades: “The argument will be made, of course, that the Senate will never pass a larger bill. That boosting the total now will only make a filibuster more likely. And that even if a larger bill were to clear the Senate, it would never clear the House-Senate Conference Committee. Perhaps that’s true. But it can’t be certain until it’s tried.”
Robert Reich in Salon notes these may be fights for later: “…the moment the economy appears to be on the mend, conservatives such as [Martin] Feldstein will want the government to cut spending. In their view, this is the only way to get the economy fully back on track. But others believe that it is precisely the track we were on that got us into this mess in the first place.”
Buy American Update
The Hill reports Obama aides seen as “free-traders” are not opposing the “Buy American” provisions in the econ recovery bill, which may help secure GOP support in the Senate:
Free-traders on President Obama’s economic team are suppressing concerns over Buy American provisions in the stimulus, derided as protectionist by corporate lobbyists.
Treasury Secretary Timothy Geithner and Obama’s top economic adviser, Lawrence Summers, have raised no objections to tough provisions in the House stimulus bill intended to ensure that U.S. iron and steel are used in any infrastructure projects, such as the construction of highways and bridges, even if they add to the project’s cost.
Nor have they complained about a provision in the Senate bill that would go much further by calling for the use of U.S. iron, steel and other manufactured goods in infrastructure spending in the stimulus.
Robert Reich, President Clinton’s secretary of Labor, said Summers and Geithner have probably calculated the criticism from abroad and decided that the higher costs of some projects are worth the political price.
“[I]n this case, when American taxpayers are paying a huge amount of money to stimulate jobs in the United States, the argument can be made that the extra cost to the government and the slight antagonism of foreign governments may be worth it,” said Reich, who sparred with Summers and Clinton Treasury Secretary Robert Rubin over trade.
He said if the U.S. stimulus bill leads foreign governments to pass similar bills benefiting their own domestic industries, “so much the better.”
Reich and some supporters of the provisions in the stimulus bill say they doubt the new language will make a difference, since Buy American provisions already apply to most federal contracting. The chief difference in the language backed by Rep. Pete Visclosky (D-Ind.) and approved by the House is to raise a threshold for exempting Buy American law. Under the stimulus, using U.S. iron and steel must raise the cost of a project by 25 percent, instead of 6 percent, for the Buy American requirement not to apply.
Like Reich, Lori Wallach, director of Public Citizen’s Global Trade Watch and a free-trade critic, said those criticizing the Buy American provisions in the stimulus are overstating their case that it will lead to a trade war. She said past Buy American laws have required the use of domestic goods unless that would have raised the cost of a project by 50 percent.
Scott Paul, executive director for the Alliance for American Manufacturing (AAM), whose members include the United Steelworkers, noted that several countries with large economies, including China, give preference to their own materials in their projects and thus don’t receive waivers allowing some of their goods to be used for U.S. government programs.
He also said the provisions could help win a couple GOP votes in the Senate, where Obama needs and wants to find bipartisan support. Paul suggested that GOP senators from manufacturing states, including Ohio, Pennsylvania and Maine, would be opposing such provisions at their own peril.
Those states’ centrist Republican senators — George Voinovich (Ohio), Arlen Specter (Pa.), Olympia Snowe (Maine) and Susan Collins (Maine) — have yet to declare their position on the stimulus.
Voinovich, however, opposes the Buy American provisions, his office said.
Bad Bank Update
The administration hasn’t finalized its plans for the heart of the bank rescue. It is considering a series of steps that would inject money into financial firms while relieving them of their toxic assets. The administration is considering a two-pronged approach that would further help banks by having the government buy a portion of their bad assets while offering guarantees against future losses on some of the remainder.
The administration continues to wrestle with the details, including what the government should pay for the troubled assets that are hampering the balance sheets of financial institutions. Mr. Geithner has assigned teams of staff to explore alternatives and is expected to present a plan to Mr. Obama shortly.
Ahead of the speech, seeking to improve public perception of the $700 billion financial rescue, the administration is this week expected to announce tougher executive-compensation restrictions for some firms that get government aid. That could help lay the groundwork with politicians and the public, who have grown weary of bailing out banks. The administration, realizing the public is expecting quick action, seems poised to announce some of its efforts in stages.
The tougher rules would apply to banks that receive a substantial amount of money. Chief executives of firms that receive “exceptional” aid will be banned from receiving any severance payments and they, along with the top 50 executives, will see their bonus pools shrink by about 40% from 2007 levels.
The Obama administration hasn’t detailed what qualifies as “exceptional” aid, but government officials say the rules will apply in cases in which the U.S. provides significant dollars, along the lines of what has been given to American International Group Inc., Citigroup Inc. and the Detroit auto makers.
W. Post’s Allan Sloan proposes a “common stock” solution: “Let the Treasury convert taxpayers’ preferred stock to nonvoting common stock at current prices. That would reduce the income and protection that taxpayers get from owning preferred stock rather than common stock but would give us stakes of about 73 and 56 percent, respectively, in Citi and Bank of America. And that way, we taxpayers would get paid, but we wouldn’t have Congress or the federal bureaucracy trying to run the banks and allocate capital. Such a move would accomplish what I’ve suggested since 2007: Dilute common shareholders massively while letting the banks stay open, lest closing them precipitate ‘systemic failure.’ The dilution would inflict pain in the right places — institutional shareholders — and perhaps cause them to police their investees in the future. Yes, having the government own majority stakes in these banks isn’t a good long-term solution. But letting them muddle around and bleed and whine isn’t working really well either. ”
The Back Forty promotes the Common Good Bank Project: “Common good banks will be community-based savings banks, designed to provide local economic stability even in the event of national or global economic collapse. Banks will be legally chartered and insured by the FDIC (which insurance is fine as far as it goes, but if a large number of banks fail at once, even the FDIC won’t be able to cover everyone’s losses.) The overall idea is to keep money and decisions about its use in the hands of people like us, rather than turning control over to corporations so they can tell us how much we may have and under what circumstances.”
Environmental groups are protesting a proposed $50 billion increase to an existing federal loan guarantee program for “innovative” energy technologies that could expand funding beyond renewable energy to include nuclear power and certain kinds of coal plants.
Both nuclear supporters and foes are uncertain about how much support to expect from the new Energy secretary, Steven Chu, who is a strong supporter of action on climate change. During his confirmation hearing, Chu pledged to expedite the release of existing loan guarantees, but he avoided any commitment to an aggressive expansion of nuclear power.
Daniel J. Weiss, senior fellow and director of climate strategy at the liberal Center for American Progress, said “this could be a real contentious issue in conference” when House and Senate negotiators try to reconcile the different versions of the stimulus package.
“This is the exact kind of spending President Obama said he didn’t want in the recovery package. It will take a lot of time to spend this money and, once you do, it won’t create many jobs,” he said.
He added that it would take years to design, permit and start building nuclear power projects, and that nuclear power companies were “hoarding these loan guarantees to use at a different time.”
Nuclear power proponents maintain that that the nation needs to expand its nuclear power capacity to keep pace with electricity demands and do so in a way that does not add greenhouse gases.