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It seems like no one really understands the stimulus package and because no one really understands it everyone is skeptical about it. All this understandable.
Several media outlets have published guides to the package which list many of its provisions. By and large these don’t really help much in understanding the bill. Here’s how MSN Money described the bill:
The $787 billion package might cut your taxes, make your health insurance cheaper, fix the roads you drive on and keep the best teachers in your children’s schools. And that’s just for starters.
Notice the word “might,” for it describes the problems all of us face in understanding the stimulus package. It’s rather like trying to understand a Rube Goldberg cartoon. A half century ago, Goldberg gained considerable fame and a 1948 Pulitzer Prize for his diagrams of outlandish machines designed to perform simple tasks in the most complicated way possible. The cartoon at the top of this essay is Goldberg’s idea for a self-wiping napkin.
What Does the Bill Say?
Rather than relying on the likes of MSN and the New York Times, the only way to really understand the bill is to actually read it. Curiously this is exactly what House Speaker Nancy Pelosi said:
Around here language means a lot. Words weigh a ton and one person’s understanding of a spoken description might vary from another’s. We wanted to see it. And not only just I had to see it I had to show it to my colleagues and my caucus. We wanted to take all the time that was necessary to make sure it was right.
That quote comes from an interesting site called Read the Stimulus which has the motto, “$850 Billion, 1588 pages, and counting… somebody needs to read it!” For those who do want to read it, the complete bill, as published by the Government Printing Office, is available here, a site set up by the White House which to its credit is also inviting public comments.
That in itself is a major change from the previous administration with its lack of openness and its indifference to public opinion. It may represent the most overlooked and important part of this entire affair, for by asking for public input, the Obama Administration is conducting its own public opinion poll, unfiltered by the media. This continues the experiment in direct democracy that began during the campaign.
Although I have not done an actual page count of New Deal legislation, having read many of the bills associated with FDR’s famous One Hundred Days, I would hazard the guess that this single bill is longer the all the bills in the Hundred Days legislation combined. For those who are interested my summary notes of the bill are available here.
Table of Contents
Here are the major provisions of the stimulus bill which Congress organized by area and department in the bill’s table of contents:
TITLE I—AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND RELATED AGENCIES
TITLE II—COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES
TITLE III—DEPARTMENT OF DEFENSE
TITLE IV—ENERGY AND WATER DEVELOPMENT
TITLE V—FINANCIAL SERVICES AND GENERAL GOVERNMENT
TITLE VI—DEPARTMENT OF HOMELAND SECURITY
TITLE VII—INTERIOR, ENVIRONMENT, AND RELATED AGENCIES
TITLE VIII—DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND RELATED AGENCIES
TITLE IX—LEGISLATIVE BRANCH
TITLE X—MILITARY CONSTRUCTION AND VETERANS AFFAIRS AND RELATED AGENCIES
TITLE XI—STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS
TITLE XII—TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND RELATED AGENCIES
TITLE XIII—HEALTH INFORMATION TECHNOLOGY
TITLE XIV—STATE FISCAL STABILIZATION FUND
TITLE XV—ACCOUNTABILITY AND TRANSPARENCY
TITLE XVI—GENERAL PROVISIONS—THIS ACTDIVISION B—TAX, UNEMPLOYMENT, HEALTH, STATE FISCAL RELIEF, AND OTHER PROVISIONS
TITLE I—TAX PROVISIONS
TITLE II—ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING FAMILIES
TITLE III—PREMIUM ASSISTANCE FOR COBRA BENEFITS
TITLE IV—MEDICARE AND MEDICAID HEALTH INFORMATION TECHNOLOGY; MISCELLANEOUS
MEDICARE PROVISIONS
TITLE V—STATE FISCAL RELIEF
TITLE VI—BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM
TITLE VII—LIMITS ON EXECUTIVE COMPENSATION
From this you can begin to see the broad outlines of the bill. It contains two parts–A and B–one an infrastructure portion and the other the assistance for those hardest hit by the crisis. The first part aims to jump start the economy by putting money into various agencies and programs while the second part aims to bring relief to the American people, particularly those most hurt by this crisis.
Principles
For a bill so long, the principles section is brief and to the point, so it can be quoted in its entirety:
PURPOSES.—The purposes of this Act include the following:
(1) To preserve and create jobs and promote economic recovery.
(2) To assist those most impacted by the recession.
(3) To provide investments needed to increase economic efficiency by spurring technological advances in science and health.
(4) To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.
(5) To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.
These five principles echo the general structure of the bill. The infrastructure portion will go for “technological advances in science and health” and “transportation [and] environmental protection.” The second part will go for economic assistance to those impacted by the recession, to create jobs and to avoid reductions by state and local governments.
All of these are not only sensible, but essential. We need only remember that bridge that dropped into the Mississippi River in Minneapolis and the subsequent reports on other bridges in need of repair to agree that infrastructure investment is long overdue. As for relief, anyone who has paid a grocery bill has felt the impact of the Bush Depression.
But the Devil is in the details–as even Ms. Pelosi admits–so exactly what areas of transportation, environmental protection and technological advances does the bill fund and what does it do for everyday Americans? Answering this necessitates reading the bill line by line and connecting each appropriation with one of the five principles–a daunting task, but a necessary one if we are to understand this bill.
Infrastructure–Science and Health Technology
As far as I know this is the first bill designed to pull us out of a depression/recession by investing heavily in science and health. The Health Information technology provisions earn themselves a whole separate section: Title XII which dares to venture into controversial areas such as the privacy of patient records. Its main aim is to provide for a national medical record-keeping system–something health care experts have called for, but which has run afoul of the daunting task of keeping the records secure and preventing insurers from using data to raise premiums or deny coverage. More to come on this section next month–for by then expect this issue to heat up!
Besides the health information funding, this section awards NASA a little over a million, the National Science Foundation two billion for “Research and Related Activities,’’ and the Veterans Administration a little over a billion.
Infrastructure–Stabilize State and Local Government Budgets
A major portion of this area is contained in Title XIV, which provides $54 billion to the Department of Education for a State Fiscal Stabilization Fund. Like the health care technology initiative this one will also inspire controversy. Its provisions include an education innovation fund, reducing tuition and fees for in-state students, and funds for renovating and modernizing school buildings.
Its most controversial provision requires that states reduce inequities in the distribution of highly qualified teachers. This provision, while laudable, also seems impossible to implement. Are states to somehow transfer teachers from rich suburban schools to struggling inner city ones? What is the meaning of “highly qualified?” Most of all, how will one of the Democrats’ key supporters–the teachers’ unions–react to this?
Other Infrastructure
One major area that has long-needed attention is the nation’s deteriorating power grid. The stimulus bill provides for improving the power grid by allocating funds to a variety of programs including $4.5 billion to modernize electrical grid and$3.25 billion to upgrade power transmission lines in the West.
There is also$27 billion for highways, $8 billion for railroads and$1.1 billion for airport improvements. But the most notable portions of this part of the bill come with its commitment to energy conservation and renewable energy. These come in the form of grant programs with $6 billion allocated for innovative energy technology loans and$3 billion for fossil energy research. While the amounts could have been larger, a principle has now been set that commits this nation to taking a path away from the energy and transportation solutions of the past.
Tax and Unemployment Provision
Probably the most publicized portion of the bill is the section on tax cuts. Already media outlets are issuing calculations about how much each family will receive. When you actually read the bill you find provisions for increasing the earned income tax credit, the child credit, Hope scholarship credits, and first time home-buyer credits. The bill suspends the tax on unemployment insurance and even allows the purchase of computers for higher education students to qualify as a deduction.
In actuality what families and individuals receive will vary greatly depending on their circumstances. However the provision everyone is commenting states there will be a tax credit for single filers making under $75,000 and married filers making under $150,000. The language states these tax payers will receive:
An amount equal to the lesser of—
(1) 6.2 percent of earned income of the taxpayer, or
(2) $400 ($800 in the case of a joint return).
Other economic provisions encourage businesses to hire veterans and “disconnected youth,” modification of the debt rules for businesses and a temporary reduction in the capital gains tax. There also are a series of bonding programs including Build America Bonds, Recovery Zone Bonds, Renewable Energy Bonds and tax-exempt bonds for schools. To encourage us to buy new cars, the bill suspends the sales and excise taxes on the purchase.
Of note is a provision for trade adjustment assistance for both firms and communities–behind which lies a tacit admission that NAFTA has not worked. This is further emphasized by the number of pages and provisions for trade adjustment relief–which together are the largest single policy initiative in the bill.
The table below summarizes these. Feel free to post questions in the comments section and I will try to reference the appropriate part of the bill. Perhaps in some small way I can help you understand what the bill means for YOU a bit better.
What’s Right
The breadth of the problems the stimulus bill addresses is unprecedented, but then so are our problems. While we have poured money into the Iraq War, military housing, technology and health care facilities have deteriorated, resulting in stories like those about the scandalous conditions at Walter Reed. While we have given millions away to millionaires our roads and bridges and other infrastructure have become unsafe, resulting in one bridge falling into the Mississippi River in Minneapolis and the flooding of the city of New Orleans. We have slashed programs in the name of “no new taxes” raising the cost of higher education for our students, lowering the quality of our schools and gutting the one area where this nation ranked far ahead of the rest of the world–research and development.
There are other unfunded mandates neglected by the Bush Administration covered in this bill. It allocates another $650 million to adequately provide those digital television conversion boxes that are in scarce supply. It puts another billion dollars into an aviation security system everyone agrees is inadequate and a pain in the rear. It begins to meet one of the oldest and largest unfunded mandates of all–special education.
The bill also provides for much-needed upgrades to our aging power grid, repairing decrepit federal buildings, and cleaning up our air and water. The bill funds alternative energy research, provides for state and local law enforcement increases, and modernizes schools and hospitals.
As I worked my way through the bill I created a list that placed programs under the five principles of the bill’s preamble. However, that soon proved inadequate, so I created another list for items that stood out for various reasons. Among some of these are a smart grid information service, a pledge for federal departments to purchase more fuel-efficient vehicles, at least one reference to favoring open source software, funding to compare the effectiveness of various medical treatments, and favoring rural broadband projects that include more than one provider.
The bill will mandate the writing of new energy efficiency codes along with setting an example by upgrading federal buildings to make them green buildings. It funds grant programs for innovations in education, energy research and creates a new office to coordinate Health Information Technology.
No bill, no President in American history has dared to tackle so many problems at once. It is as if the Hundred Days of the New Deal were all packed into one bill.
What’s Wrong
Unfortunately what is right with this bill is exactly what is wrong with it, for by trying to do so much it does none of those things adequately. The five principles seem to have been rather broadly interpreted–for this bill contains provisions for lead paint removal, violence against women, and a billion for “periodic censuses.” There is no systemic attempt to prioritize initiatives nor to identify which of the hundreds of ideas in the bill will provide the most leverage. It is a shotgun approach that scatters money in all directions.
There also seem some priorities that are questionable at best. Do we really need a $200 million dollar Homeland Security headquarters, funding for hydroponic tomatoes and more money for the already ridiculous border fence? But it is the health technology area that is the most puzzling. It adds seventy pages (1/6 of the final text) of complexity and controversy to a bill that is already too complex and controversial. Frankly, it should have been dealt in another bill, one that could have been more fully debated outside of the rush to get this one passed.
Several patients’ rights groups are already up in arms over this section. Ashley Katz, director of Patient Privacy Rights stated:
Congress must close a number of the unnecessary and damaging loopholes designed by industry that have been added to the economic recovery package.
That our health care technology needs to be upgraded and rationalized is obvious, but is it an economic stimulus that will put people back to work to the same degree as more basic infrastructure such as roads, bridges and the power grid? Curious as to how the health care technology provisions got into the bill I did some research and found out that there was some very heavy behind-the-scenes lobbying by guess who–Google. Guess who were the number three and four contributors to the Obama campaign– Google and Microsoft. Oh yes, guess what the acronym is for the committee that will oversee this–HIT.
This leads to another major problem: because of large expenses for questionable measures like health care technology the bill does not allocate enough funding to other areas. There are few major programs in the bill that are not underfunded. Particularly egregious infrastructure examples include only $27 billion for highways (which is only $7 billion more than the total cost of Boston’s Big Dig), $3.5 billion to upgrade western power transmission lines, and two billion to a Corps of Engineers which could probably spend that on New Orleans alone.
But it is in the main purpose of the stimulus bill–to prop up an ailing economy and aid those already hit hard by it, that the bill falls far short. Section 502 rural housing receives only $10 billion, low income housing tax credits only $2.25 billion, the health insurance tax credit only $800 million, homelessness prevention only a little over one billion. Given the magnitude of these problems the funds allocated amount to mere tokens.
The much-vaunted tax credit will not even pay a portion of most families’ monthly bills. Given the huge tax breaks received by the rich under George Bush this is frankly an insult. Plus the tax cuts will not do much to stimulate the economy. With family grocery bills increasing astronomically, my guess is it will not even help much with that.
As for waving the sales tax on new car purchases that is just stupid because it will take funds from already strapped state revenues. I wonder how folks in my home state of Minnesota will feel when we have to increase our deficit to help Detroit, especially since many people like me cannot even afford a new car, sales tax or no sales tax.
Other programs in the bill suffer a shortage of funds. For example, the bill awards up to one million dollars per community college for career training grants, but only budgets a total of forty million. In other words somewhere around 40 community colleges across the country will receive grants at the million dollar level, which is less than one per state. You can do the math for lesser amounts. A farm trade adjustment provision awards $12,000 per farm but only allocates twenty-two million, or enough for enough for less than 2,000 farms. A Temporary Assistance for Needy Families Program allocates only five billion dollars, far less than the health care record-keeping part of the bill.
There is also the troubling fact that the bill seems to make some victims of the depression more equal than others. The bill includes dozens of provisions for firms, communities and individuals under what the bill terms “trade adjustment relief.” It is not that these people do not need help, but the fact the bill singles out these people as opposed to other groups equally deserving of aid (think for example of all the people out of work because of the manipulations of banks and financial institutions).
Finally I cannot resist this dig. The bill does nothing to reinstate even a portion of the Glass-Steagall Banking Act, but then what should we have expected from Lawrence Summers, Timothy Geithner and company, all of whom had a role in the repeal of Glass-Steagall. Nor curiously for an African American President, does it relieve the racist roots of the housing crisis which I wrote about in an award-winning series last fall.
Further Thoughts
President Obama’s own assessment of the stimulus bill mar have it about right. It is an imperfect bill, not a bad bill. It is a bill that is misunderstood and criticized for the wrong reasons by people who have not read it.
The strength of the bill is that it addresses eight-plus years of neglect, neglect of everything from our roads and bridges to the state of our military housing and our research facilities. Under years of Republican budget cutting, America has wilted like a once mighty tree in a drought. On top of this comes the realization that had we merely poured the funds that have gone to the Iraq War into the areas identified by the stimulus package, we would not have needed for it to be so broad.
Still, the bill should not have attempted to solve every problem at once, for by doing so it does nothing very well. One of the meat department employees in my local grocery store put it well when we started talking about the stimulus bill, saying it was like putting a bandaid on a gaping wound.
Yet we need to remember that had George Bush written this bill we would have had Herbert Hoover redux with more tax cuts for the rich. Barack Obama has yet to prove he is Franklin Roosevelt, but he definitely is not Herbert Hoover.
The last part of this series will deal with the implications of this bill for America’s economic, social and political future.
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