CONGRESSWOMAN ELISE STEFANIK
The House is scheduled to begin consideration of the House amendments to the Senate amendments of H.R. 2847 on Wednesday, December 16, 2009, under a same day rule making three other bills in order.
H.R. 2847 would provide approximately $70 billion in discretionary spending for a second Democrat economic "stimulus" similar to H.R. 1, which passed in February 2009. Funds for this new spending would be offset with rescissions from the Troubled Asset Relief Fund (TARP). In addition, the bill includes roughly $79 billion in extensions and expansions of mandatory spending programs and tax provisions.
The bill would provide billions in funding for many of the same programs that received spending increases in the first Democrat stimulus, including $27.5 billion on highway spending, $23 billion for States to avoid education budget shortfalls, $41 billion for an Unemployment Insurance benefit extension and $23 billion to increase federal Medicaid payments to States. The discretionary spending would be offset with funds rescinded from TARP, while other funds or revenue losses would be deemed "emergency" spending and thus, not be subject to House PAYGO rules.
TITLE I-INFRASTRUCTURE AND JOBS INVESTMENT
Highway Funding: Provides $27.5 billion for highway reconstruction, repair, and construction conducted through the Federal Highway Administration through September 30, 2011. This is the same amount of highway funding provided by the Democrats' stimulus in February.
Education Jobs Fund: Provides $23 billion for an "education jobs" fund to be administered by the Department of Education and would remain available through FY 2010. The money would be distributed in the same manner as the $53.6 billion provided in the Democrats' stimulus for the State Fiscal Stabilization Fund. Under the bill, the funds could be used to pay current staff, hire new staff, or for public school modernization.
Housing Funds: Provides $1 billion for the Public Housing Capital Fund, which received $4 billion in the Democrats' first stimulus and an additional $3 billion in the recently passed omnibus. The conference report also contains $1.1 billion to create a new government Community Planning and Development Housing Trust Fund. Some Members have raised concerns that funds from this new trust fund could be used to provide federal money to the Association of Community Organizations for Reform Now (ACORN).
Federal Transit Administration: Provides $6.1 billion for capital assistance for the Federal Transit Administration (FTA), which received $8 billion in the first stimulus for high speed rail corridors which has yet to be expended. The bill also provides $1.7 billion to the FTA for fixed guide way infrastructure investment and $500 million in additional capital investment grants.
Amtrak: Provides $800 million for Amtrak for fleet modernization. Amtrak is a program that has repeatedly failed to be competitive and continues to need federal subsidies to cover operating losses and capital costs. For instance, Amtrak is forecasting a loss of $492 million in 2009. Furthermore, the so-called "stimulus" bill contained $1.3 billion for Amtrak and the recently passed omnibus contained an additional $1.5 billion in funding for the government-supported transit company.
Qualified School Bonds: Expands a category of tax-credit bonds, known as qualified school construction bonds to allow the federal government to issue refundable tax credits and make cash payments to bondholders. Under current law, qualified school construction bonds are issued by State and local governments and the federal government pays interest in the form of non-refundable tax credits against the federal income tax liability of the bondholder. Refundable tax credits require the government to make direct payments to taxpayers if the credit is more than the taxpayer owes in federal income taxes.
TARP Funds: Rescinds $150 billion from the $700 billion Troubled Asset Relief Program to pay for $75 billion of the discretionary spending in the bill.
Other Funding Increases: The legislation would provide discretionary supplemental funding for a number of federal agencies and programs above and beyond their regular appropriation. The vast majority also received supplemental funding increases in FY 2009 and FY 2010 in the Democrats' stimulus legislation. A summary of other programs receiving extra funding follows:
Ø $1.79 billion for the Community Oriented Policing Services (COPS) program, which received $1 billion in the stimulus bill.
Ø $715 million for Army Corps of Engineers for construction. The Corps received $2 billion for construction in the stimulus bill.
Ø $100 million for the Bureau of Water Reclamation's (BOR) water and related resources projects. BOR received $1 billion from the stimulus for water and related resources.
Ø $2 billion for the Department of Energy (DOE) Innovative Technology Loan Guarantee program, which received $6 billion in the stimulus.
Ø $500 million for Department of Homeland Security (DHS) Firefighter Assistance Grants, which received $210 million in the stimulus bill.
Ø $20 million to the Bureau of Land Management (BLM) for lands and resources management. This account received $125 million in the stimulus bill.
Ø $30 million for the U.S. Fish and Wildlife Services (FWS), which received $165 million in the stimulus.
Ø $50 million in additional funding for the National Park Service (NPS), which received $145 million in the stimulus.
Ø $20 million for BLM Wildland Fire Management, which received $15 million in the stimulus.
Ø $2 billion for Environmental Protection Agency (EPA) State and Tribal Assistance Grants, which received $6.4 billion in the stimulus.
Ø $75 million for the U.S. Forest Service (USFS) for State and private forestry funding, which did not receive any stimulus funding.
Ø $40 million for the National Forest System, which did not receive any stimulus funding.
Ø $35 million for USGA Wildland Forest Management, which received $500 million in stimulus funding.
Ø $1.25 billion for the Department of Labor (DOL) Employment Training Administration, which received $3.9 billion in the stimulus. $500 million of the funds would be for youth summer jobs.
Ø $300 million for Title IV Student Financial Assistance, which received $15.6 billion in the first Democrat stimulus.
Ø $132 million for the Corporation for National and Community Service, which received $160 million in the stimulus. The agency makes grants to pay for "volunteer" programs through Senior Corps, AmeriCorps, and Learn and Serve America.
Ø $68 million for the National Service Trust, which received $40 million in the stimulus.
Ø $500 million for Federal Aviation Administration (FAA) Grants-in-Aid for Airports, which received $1.1 billion in the stimulus.
Ø $100 million for the Maritime Administrations' Maritime Guaranteed Loan Program.
Title II-SURFACE TRANSPORTATION Extension
Extension of Highway Trust Fund: The conference report would extend federal highway and surface transportation programs and authorize the appropriation of funding from the Highway Trust Fund (HTF) for the rest of FY 2010, through September 30, 2010. The existing federal transportation programs and spending authority under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: a Legacy for Users (SAFETEA-LU) will expire on December 18, 2009. The bill would also transfer $19.5 billion from the General Fund to the HTF, increasing the bill by the same amount.
Title III-Unemployment and other Emergency needs
Refundable Child Credit Expansion: Eliminates the earned income requirement for the child care tax credit in 2010, allowing parents who do not work to receive a fully refundable tax credit of $1,000 per child at a cost of $2.3 billion. When the tax credit was first enacted, it required that parents earn at least $10,000 to qualify, which was lowered to $3,000 for 2009 and 2010 in the Democrats' first stimulus. Democrats indicate that this provision will make 16 million more people eligible for this program. Refundable tax credits require the government to make direct payments to taxpayers if the credit is more than the taxpayer owes in federal income taxes.
SBA Loans Fee Waiver Extension: The bill includes $354 million for continuation of reduced fees for Small Business Administration (SBA) 7(a) loans and authorizes a 90 percent loan guarantee through the end of Fiscal Year 2010. The "stimulus" bill gave the SBA $375 million to increase its guarantee on 7(a) loans and to reduce or eliminate fees on both its 7(a) loans. These funds included in the "stimulus" bill have run out. The 7(a) Loan Program is the SBA's primary program to help start-up and existing small businesses obtain financing when they might not be eligible for business loans through private lending channels. SBA itself does not make the loans, but rather guarantees a portion of loans made and administered by commercial lending institutions. Participating lenders agree to structure loans according to SBA's requirements, and apply and receive a guaranty from SBA on a portion of this loan.
Extension of "Stimulus" Unemployment Provisions: The bill would extend the nationalization of the extended benefit unemployment program through June 2010, at a cost of $41 billion. However, given that the bill would use entirely federal funds to extend unemployment benefits in many States for a period totaling over two full years, some Members may echo the concerns of noted economist Martin Feldstein, who previously testified that extended unemployment would "create undesirable incentives for individuals to delay returning to work. That would lower earnings and total spending."
During economic downturns, Congress has acted to extend unemployment benefits beyond the statutory requirement of 26 weeks. Last year's wartime supplemental (P.L. 110-252) provided a new program of extended unemployment compensation benefits for up to 13 weeks (39 weeks total). Legislation signed by President Bush in November 2008 (P.L. 110-449) extended the period of extended unemployment compensation from 13 to 20 weeks (46 weeks total), with an additional 13 weeks (59 weeks total) available in high unemployment States. Legislation passed by Congress in October (P.L. 111-92) extended unemployment benefits for 14 weeks for all individuals (73 weeks total), with an additional six week extension (79 weeks total) for individuals in States with total unemployment rates above 8.5 percent. According to the Department of Labor, 38 States and the District of Columbia qualify as "high unemployment" States for purposes of the additional weeks of unemployment compensation as of December 13, 2009.
In addition, the "stimulus" bill, in addition to shifting the financing for extended unemployment compensation benefits to the Treasury (as opposed to the Unemployment Trust Fund), and increasing all unemployment benefits by $25 per week through the end of 2009, effectively nationalized for the first time the Federal/State extended benefit program authorized in permanent law. That program has since its inception in the 1970s paid extended benefits in high unemployment States using 50 percent State funds. Extended benefits last up to 20 weeks, meaning the total maximum duration of 100 percent federally funded extended benefits today is a record 73 weeks-up to 53 weeks under the "temporary" program and another 20 weeks under the "permanent" program, which is currently entirely federally funded. Thus unemployed workers can receive a grand total of 73 weeks of federal benefits, or 99 weeks (counting 26 weeks of State unemployment benefits) available nationwide-with a total of 105 weeks available in high unemployment states.
Extension of "Stimulus" COBRA Premium Subsidy: Provisions of the Consolidated Omnibus Reconciliation Act of 1985 (COBRA) provide for separated employees and their dependents to remain on their previous employer's group policy for 18 months, or up to 36 months in some cases. Employers are permitted to charge former workers electing COBRA coverage the full cost of their group insurance premiums, plus a 2 percent fee to cover administrative costs. The "stimulus" (P.L. 111-5) provided a 65 percent premium subsidy to employers to cover the costs of individuals electing COBRA coverage for up to nine months, provided such election came as a result of the individual's involuntary termination from employment during the period from September 1, 2008 to December 31, 2009. Under the "stimulus", subsidies continue for a maximum of nine months, but terminate once the individual becomes eligible for other employer-based coverage or Medicare. Subsidies begin to phase out for individuals with adjusted gross incomes over $125,000 and families with incomes over $250,000, phasing out completely at income levels of $145,000 and $290,000, respectively.
The bill would extend the length of the "stimulus" subsidy program from nine to 15 months, such that eligible individuals could maintain their coverage through June 30, 2010. The bill would also make employees losing their jobs from January 1, 2010 through June 30, 2010 also eligible for the 15 months of COBRA subsidies. The bill also clarifies that individuals who suffered from a reduction in hours prior to involuntary termination would qualify for the COBRA subsidy program, and makes technical changes to the program regarding the retroactive enrollment of certain individuals once qualified for subsidies.
This provision would cost the federal government $12.3 billion in reduced revenue over five and ten years, as the subsidy would be paid to employers in the form of a reduction or rebate of taxes (both income and payroll) withheld.
As with the extension on of the Medicaid bailout above, many may view this further extension of health insurance subsidies-again, totally unpaid-for-as a further attempt to circumvent the President's promise that his health "reform" bill will cost "only" $900 billion, and will not increase the deficit. If Democrats hope to extend provisions like the COBRA subsidies and Medicaid bailout piecemeal through 2013 or 2014-when the major provisions of their "reform" bills will finally take effect-such efforts would cost several hundred billion dollars-yet the majority has made no attempt to offset the costs of such a federal spending binge.
Extension of Medicaid "Stimulus" Funding: The bill provides for an extra two quarters of increased Medicaid funding for States, covering the first two calendar quarters of 2011. The "stimulus" legislation (P.L. 111-5) provided a 6.2 percent across-the-board increase in the federal matching rate to all States, as well up to an additional 11.5 percent for States with significant increases in unemployment. CBO scores this provision as costing $23 billion.
Given that Section 1749 of the Pelosi health care bill (H.R. 3962) already included two additional quarters of an extended Medicaid bailout, and given that the current Medicaid bailout enacted in the "stimulus" does not expire until December 2010, many may view these provisions as a patently transparent attempt to reduce the size of Democrats' government takeover of health care by siphoning portions of it into other legislation-while simultaneously breaking President Obama's promise that such legislation will not increase the deficit. Many may further question the logic of providing $23.5 billion to extend the "stimulus" bill's bailout funding to States-only to impose $34 billion in unfunded mandates on these same States in the years after 2014 to pay for future Medicaid expansions in the Pelosi health care bill.
Social Security Fee Withholding: The bill extends and makes permanent two Social Security demonstration programs created in a 2004 act (P.L. 109-203)-one which provides for attorney fee withholding in Supplemental Security Income (SSI) cases, and the second which extends fee withholding for non-attorney representatives in the disability claims process who meet certain qualifications as laid out in the statute and determined by the Social Security Administration.
TITLE IV-GENERAL PROVISIONS
Buy American: Requires any funds provided under this legislation to be subject to the "Buy American" provision of the first Democrat stimulus.
On February 13, 2009, the House passed H.R. 1, the American Recovery and Reinvestment Act of 2009, also known as the Democrats' "stimulus" bill. The bill contained $787 billion in new spending and tax provisions and required the U.S. to increase its interest payments on borrowed money by $347 billion over ten years, raising the bill's total cost to $1.1 trillion. Democrats' said the stimulus would create between three and four million new jobs. In January, the Obama Administration claimed that unemployment would not surpass 8 percent if the stimulus was passed. However, unemployment is now at a 26-year high of 10 percent and more than 2.6 million Americans have lost their jobs since February.
Some Members may be concerned that this legislation makes the same mistakes as the original "stimulus" bill passed in February. The vast majority of the programs funded by the bill are programs that have yet to spend out the initial stimulus funding. In other circumstances, stimulus funds were used to subsidize current spending rather than create jobs. For instance, the stimulus provided $53.6 billion for the "State Fiscal Stabilization Fund," which was used to subsidize States' public education costs and supplant State budget shortfalls, rather than hire a substantial number of new employees. The stimulus also contained $27.5 billion for highway funding and $8 billion for high speed rail projects. To date, however, only $6.8 billion of the $45 billion for the Department of Transportation from the stimulus has been paid out.
In addition, some Members may be concerned that the legislation uses rescinded funds from TARP to offset the cost of the bill rather than using those funds for deficit reduction. During the first debate on TARP, a number of prominent Democrats claimed that any recouped TARP funds would be returned to the American taxpayers.
"If American taxpayers are financing this solution then they have to be treated like investors; they should get every penny of their tax dollars back once the economy recovers... If this is managed correctly, and that's an important if, we will hopefully get most or all of our money back and possibly, even turn a profit on the government's intervention; every penny of which will go directly back to the American people."-Senator Barack Obama, Senate Floor Speech, October 1, 2008.
"The American people did not decide to dangerously weaken our regulatory and oversight policies. They did not make unwise and risky financial deals. They did not jeopardize the economic security of the nation. And they must not pay the cost of this emergency recovery and stabilization bill."-Speaker Nancy Pelosi, Press Release, September 28, 2009.
"After five years, the Administration will have to tell us the true net cost to taxpayers and submit a plan laying out how Wall Street will pay us back... it is still a clear statement that the taxpayers should be repaid."-Majority Leader Steny Hoyer, Press Release, September 29, 2009.
According to CBO, H.R. 2847, including $75 billion in offsets from TARP, would have the net effect of increasing the federal deficit by $64.8 billion over ten years.