Fresh off of a $787 billion stimulus package passed in February of 2009, congressional Democrats are now beginning to talk about passing a second, more modest stimulus package sometime within the next few months – aimed at easing the unemployment crisis. From Reuters:
Congressional Democrats’ push for another U.S. stimulus package got a boost on Tuesday from an analysis that found their earlier effort had blunted the impact of the worst economic downturn in 80 years.
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As Democrats weighed measures to bring down the nation’s double-digit unemployment rate before the November 2010 congressional elections, they touted a nonpartisan report that showed the $787 billion stimulus package passed in February had kept between 600,000 and 1.6 million people off the unemployment rolls.
That effort, panned as a boondoggle by Republicans, also boosted the nation’s GDP between 1.2 percent and 3.2 percent, the Congressional Budget Office found.
Democrats hope to pass a more modest effort in the next two months, targeted at bringing down the unemployment rate.
That rate, currently at 10.2 percent, could have been above 11 percent had Congress not passed the first stimulus package, House Majority Leader Steny Hoyer said.
“Is it where we want to be? It is not, but it is certainly a very, very definite, positive impact on the economy,” Hoyer told reporters. “The actions we have taken have worked.”
Elements of the next package are still up in the air
There is still a lot of debate about whether the first stimulus did what it aimed to do, or whether it just added to our national debt. In any event, the Democrats are satisfied that it did what it set out to do, and they plan to pass another one to help ease the high national unemployment.
What Will Be Included In The Second Stimulus?
So what are some of the things that are going to be included in the new stimulus bill? No bill has been finalized yet, and the proposals seem to vary quite a bit, but here are a few of the provisions that have been proposed.
- New spending on highways, rail, water and sewer systems, and other infrastructure
- Increased lending for small business, using funds left over from the $700 billion Troubled Assets Relief Program
- Money to help struggling state governments avoid laying off police, schoolteachers and other public employees
- Money to local governments for job creation programs like park cleanups and refurbishing public buildings
- Further extending unemployment benefits and health-insurance subsidies for the jobless
- A tax credit for businesses that hire new employees
- Extending a package of soon-to-expire business tax breaks, such as a credit for research and development.
- Unspecified measures to help domestic manufacturing
- Upgrading buildings for greater energy efficiency
So it doesn’t look like there are a lot of stimulus measures being discussed that would give individual tax breaks, stimulus checks or other benefits for individual taxpayers. Most of the measures seem aimed at creating jobs, or saving existing jobs.
How Will They Pay For Another Stimulus?
One concern I have with any of these proposals for stimulus spending is – how are we going to pay for it? More taxes? Yes, probably.
The package could also include a tax on financial transactions to help cover the cost, but several Democratic senators said it would have to be written in a way to avoid driving financial activity offshore.
“I don’t want to impose a tax that clearly is going to make American companies less competitive, (but) it’s on the table,” said Democratic Senator Max Baucus, chairman of the tax-writing Senate Finance Committee.
Lawmakers are considering other ways to pay for the measure without threatening the shaky economic recovery. Highway construction, for example, could start quickly but be paid for through measures that would take effect in several years when the economy is healthier, said Democratic Rep. Betty Sutton, co-chair of a House task force set up to consider proposals.
Is it just me, or do they really not know how they’re going to pay for these measures – except through imposing a new tax on businesses – that will in the end cause more jobs to be lost? It really seems like their attempts to solve the problem are creating new problems in the process.
What do you think about these proposed stimulus measures? Do you think they should pass, or would you rather see them not taken up? Will they improve the unemployment situation or will they just add to the ballooning deficit? Let us know your thoughts in the comments!