The early reviews are in on the economic stimulus plan that has emerged out of talks between the White House, House Speaker Nancy Pelost and House Minority John Boehner. And they are not kind.
The Economic Policy Institute’s Lawrence Mishel and Nancy Cleeland write in The Huffington Post:
In their haste to make a deal on a stimulus package, Congressional Democrats are apparently willing to throw good economic sense out the window.
The package outlined in news reports this morning gets it half-right by ensuring that lump sum payments go to the lowest income earners, who need them most and are most likely to spend them, as well as to couples who earn up to $150,000 a year.
But the other half of the deal — amounting to as much as $70 billion in tax breaks to businesses — is nothing more than political acquiescence disguised as good policy.
That is because, as they point out, the business tax breaks, if they even work at all, will take at least several months to begin to take effect. And they are premised on the assumption that these businesses will use the tax break on goods that will create or sustain American jobs.
(UPDATE: My colleague David Sirota weighs in with this initial observation: “As wages stagnate and the housing crisis hits families hard, Congress is putting $70 billion out of a $150 billion package to corporate tax breaks.” He promises to bust this wide open in his syndicated column on Friday.)
Meanwhile, two meaningful things that Congress could do to get additional money into the hands of people who need it most in a recession, and who are most likely to spend it, were taken off the table. Those items were extended unemployment benefits and increased Food Stamp allotments.
The New York Times reports that Republicans on Capitol Hill were cheering that the compromise emerging out of the House negotiations excluded what they called “extraneous spending” on — you guessed it — unemployed people, low-income people and on fixing decayed public infrastructure (another recession-fighting, job-producing tool also taken off the table).
The giddy press releases from conservatives cheering that an economic stimulus package won’t offer stimulus to those who need it most, but will divert a significant chunk into yet another speculative gamble on the business community, should prompt Democrats in Congress to pursue what they know is right: a meaningful stimulus package that puts money into the hands of the unemployed and others under economic stress, and embraces public job creation as well as targeted boosting of the private sector.
Of course, we all want Congress to act quickly. But we also want Congress to get this right. Fortunately, some Democrats in the Senate, such as Sen. Charles Schumer of New York and Edward M. Kennedy of Massachusetts, are not going to merely rubber-stamp the compromise that the Bush administration and House leaders apparently want to see rushed through without debate. They are arguing, correctly, that it is lunacy to not to use your best recession-fighting tools, such as extended benefits for people who can’t find work after months of searching, at a time like this. And given the suffering middle- and lower-income people are already going through under the Bush economy, we can’t afford to compromise much more.