What I wrote here on Jan. 18: “As I’ve said repeatedly now, stimulation-palooza will inevitably be larded up with special-interest pork and other spending goodies in the tens of billions of dollars.”
What I wrote here on Jan. 16: “I’m getting a few e-mails from readers who are convinced I shouldn’t be worried about the White House/Republican “economic stimulus” proposals because they’ll only include tax cuts. No, they won’t. They will be larded up with Clintonian goodies and giveaways and bailout measures–home heating bill aid, foreclosure aid to states, etc. etc. etc. They’ll only be arguing about how much to give away, not whether.”
What I wrote here on Jan. 4: “It would be one thing if “economic stimulus” simply meant tax relief. But in Washington–what with the White House looking for a legacy, the subprime crisis exploding, and “bipartisan consensus” in demand–there’s no way in hell any “economic stimulus” package will win approval without being larded up with gobs of needless, unwarranted spending. I don’t care who’s occupying the White House. “Economic stimulus” is a synonym for Big Government.”
While Congress edges closer to an agreement over a fiscal stimulus package, a contingent of lawmakers and tax policy experts are suggesting what some are ironically calling a “second tranche” of tax cuts and spending to keep the economy out of recession.
Lawmakers are trying to complete the initial stimulus package by Feb. 15, before Congress recesses for a week. However, in order to meet budgetary guidelines and a tight time frame, many tax provisions will be excluded from the package. The stimulus proposal, crafted by congressional leaders and Treasury Secretary Henry Paulson, would dole out $100 billion in individual tax rebates and $50 billion in business tax incentives.
During a press conference last Thursday, House Speaker Nancy Pelosi (D-Calif.) said the initial stimulus was crafted to be swift and help stave off a recession, adding that “if it does not, there will be more to come.”
…additional spending on infrastructure, extending the carryover for net operating losses, investment breaks in alternative fuels and repatriating capital abroad from U.S. subsidiaries.
…Sen. Ron Wyden (D-Ore.) last week mentioned health-care reform as a way to help stabilize markets. Sens. Jim Bunning (R-Ky.) and Jon Kyl (R-Ariz.) prefer incentives for business investment and individual saving rather than spending incentives such as the $600 individual tax rebates. And several members on the House tax committee, including chairman Charles Rangel (D-N.Y.), want to extend unemployment insurance.
A second tranche likely would hinge upon some kind of a trigger, such as unemployment rising precipitously. The “trigger proposal” was pitched by former Reagan Administration economist Martin Feldstein, now a Harvard economics professor.
…A second-tranche stimulus could take longer and be prone to more earmarks, though it would likely adhere to “pay-go” rules, which require corresponding spending cuts and tax increases to offset tax cuts, lawmakers told Financial Week. This initial stimulus is expected to pass without adherence to pay-go.
Lawmakers aren’t the only ones seeking more provisions. Liberal groups and unions criticized portions of the House stimulus agreement, saying it won’t deliver enough benefit in time. The Center for Budget and Policy Priorities said a temporary boost in food stamp benefits and an extension of unemployment benefits would deliver “the most bang for the buck.”
The CBPP also stated that the stimulus package’s business tax cuts would cost states at least $4 billion in tax revenue, leading to further budget cuts in state health-care and education programs. Unlike the federal government, states are required to balance their budgets. State fiscal relief is another provision many legislators—particularly those from hard-hit states such as Michigan and Ohio—will request.
Business groups, such as the U.S. Chamber of Commerce and the National Association of Manufacturers, also had been lobbying to include tax exemptions and spending projects.
Hans Bader at OpenMarket.org spotlights the welfare lard in the stimulus package:
As if that deal didn’t contain enough welfare already, the Senate is preparing to lard up the “stimulus” plan with billions more for mortgage counseling, aid to state governments in the red, food stamps, extended jobless benefits in (mostly high-tax, anti-business) states with high unemployment rates, and home heating oil subsidies.
Even if the “stimulus” plan does stimulate consumer spending, it won’t necessarily boost American industrial production, since many consumer goods are now purchased from foreign countries, like China.
The “stimulus” plan will give greatly expanded lending authority to Fannie Mae, the government-backed mortgage giant that engaged in Enron-style accounting fraud and helped create the housing bubble that threatens the economy with a recession.
This “mortgage counseling” funding increase is Chuck Schumer’s Big Idea. They’re talking $200-300 million more in addition to the $180 million for “Housing Counseling Assistance” that he helped stick into the omnibus spending bill last year.
A tipster writes: “If you google ‘mortgage counseling,’ you will get the HUD approved list of mortgage counselors, which has to reveal their affiliation. Many are affiliated with ACORN and La Raza. $200 million to La Raza and ACORN. At election time. Seems like a coincidence. Why do we need mortgage counselors if we just raised the FHA limit to $725,000? Wouldn’t the government handle that ‘mortgage counseling?'”