Bill Statistics
The Middle Class Position
How They Voted
Grades
The House receives a grade of C for its support of the middle class on this piece of legislation.
244 Representatives voted for the middle-class position; 188 voted against.
See how each member voted on this bill:
American Recovery and Reinvestment Act of 2009 - House Version
- Child tax credit
- College tuition
- Consumers
- Earned income tax credit
- Economic stimulus
- Education
- Efficient technology
- Elementary school
- Energy & Environment
- Energy conservation
- Government Accountability
- Green buildings
- Green jobs
- Head Start
- Health Care
- Heating fuel
- High school
- Housing
- Income taxes
- Job training
- Medicaid
- Medical research
- Middle school
- Pell Grants
- Public housing
- Public infrastructure
- Renewable fuels
- Student loans
- TANF
- Tax cuts
- Tax Fairness
- Unemployment
- Workplace & Job Creation
01.26.2009 [House]
Rep. David Obey [D-WI]
The American Recovery and Reinvestment Act authorizes approximately $544 billion in new spending and $275 billion in tax cuts. The legislation seeks to stimulate the economy by preserving and creating jobs, assisting the unemployed and uninsured, and providing state budget relief while making investments in infrastructure, education, science, health, and energy efficiency.
The legislation increases and expands unemployment insurance at a cost of about $40 billion. The bill continues the extended unemployment benefits program, which currently offers up to 33 weeks of benefits, through the end of 2009, provides funds to increase the benefit by about $25 per week, and offers incentives for states to include in their benefits programs low-wage and part-time workers who are often excluded from unemployment insurance. In addition, the bill expands the health insurance options available to unemployed workers through Medicaid and COBRA, a federal program that allows the unemployed to receive coverage through their former employer’s health plan. The Act would temporarily subsidize COBRA premiums for 12 months, make COBRA available to unemployed older workers until they are eligible for Medicare, and fund Medicaid for states that offer coverage to certain unemployed and low-income individuals. The federal-state matching rate for Medicaid is temporarily increased at a cost of approximately $87 billion. The legislation also increases food stamp benefits, worth about $20 billion.
The American Recovery and Reinvestment Act contains many spending provisions related to education. It provides $13 billion in Title I funds to help disadvantaged students meet standards and $13 billion for the IDEA special education program, along with additional funds for school modernization and repair, educational technology, child care, and Head Start ($2.1 billion). Separately, the bill appropriates $79 billion to prevent cuts in state education services. The Pell Grant is increased by $500 to $5,350 for the 2009-2010 school year and the maximum Stafford loan is raised by $2,000 to $7,500 for an incoming freshman.
The legislation appropriates $30 billion for highways projects, $12 billion for transit and rail projects, and $19 billion for water and other environmental projects. The Act includes funds to modernize the electricity grid, to renovate and repair federal buildings for increased energy efficiency, to retrofit low-income housing, and to weatherize homes. Energy provisions also include block grants to state and local governments to increase energy efficiency and funds for renewable energy research.
Other spending provisions include $4.2 billion in CDBG funds for the purchase and rehabilitation of vacant foreclosed properties to create affordable housing; $20 billion for health information technology to encourage medical providers to computerize records; $1.5 billion for homeless services; $6 billion to expand broadband and wireless services in underserved areas; funds for science research and facilities, Low-Income Home Energy Assistance, the Temporary Assistance for Needy Families program, and for low-income disabled and elderly individuals; and $430 million in lending assistance and loan guarantees to encourage small businesses to make loans.
Additionally, the American Recovery and Reinvestment Act contains tax breaks for individuals and businesses. The Making Work Pay tax credit establishes a $500 refundable tax credit in 2009 and 2010 for working individuals that phases out at $75,000 (at $150,000 for joint filers who receive a $1,000 credit). Because the credit is refundable, households with no tax liability are eligible to receive a tax refund under the program. The American Opportunity education tax credit provides a maximum $2,500 annual tax credit for higher education in 2009 and 2010 (40% of the credit is refundable) that phases out at $80,000 for individuals ($160,000 for joint filers). The legislation also temporarily expands the Earned Income Tax Credit and the Child Tax Credit. A $7,500 tax credit for first time homebuyers that was included in previous housing legislation no longer must be paid back to the government.
Tax cuts for business include a carryback loss provision that allows companies to write off current losses against profits earned up to five years ago (instead of two years ago as is currently permitted). This provision excludes institutions that have received TARP funds. A bonus depreciation clause permits tax breaks for capital expenditures made in 2009. Another tax provision doubles the tax break for capital investments made by small businesses in 2009.
The legislation extends tax credits for production of renewable energy and increases credits for energy efficiency improvements made on existing homes and for renewable energy research and development.
The American Recovery and Reinvestment Act includes provisions encouraging expeditious use of funds appropriated in the bill. It also mandates that contractors hired under the Act participate in the E-verify program and that iron and steel used in projects authorized by the Act be produced in the United States. A website will publish how funds are spent, on what contractors, and with what formula grant allocations.
Middle Class Supports. Economic conditions are bleak. The Congressional Budget Office estimates that if the economy continues on its current course, both the length and depth of the current downturn will be the worst since the Great Depression. For middle-class Americans, this means job and wage cuts, loss of health insurance, and, simply, a daily struggle to keep up with everyday costs like mortgage payments and college tuition.
The Congressional Budget Office estimates that if current economic conditions persist the unemployment rate could reach as high as 9.2% by 2010. With 46 million Americans already uninsured, the Kaiser Family Foundation reckons that if unemployment averages just 7% in 2009 (the current rate is 7.2%), the number of uninsured will increase by 2.6 million with an additional 2.4 million individuals enrolled in Medicaid and SCHIP. Indeed, state governments are struggling to provide the increased services needed to keep the swelling ranks of unemployed, uninsured individuals from falling out of the middle class. But the current economic climate has left states with decreased revenue from income, sales, and property taxes: 45 states face budget shortfalls with combined budget gaps of $350 billion through 2011. To confront these gaping budget holes, more than 20 states have implemented or are considering cuts to health insurance programs; the same is true of K-12 and early education programs and of funds for public colleges and universities.
Beyond the decidedly dire short-term outlook, economic improvement is probably quite far off. Douglas Elmendorf, director of the Congressional Budget Office, has testified that “economic recovery is likely to be slow and protracted.” Thus, programs that address longer-term concerns – investment in infrastructure and green technology are two primary examples – are as important as an immediate, stimulative jolt to the economy.
The American Recovery and Reinvestment Act ties together measures designed to assist middle-class households struggling to make ends meet, provisions that will provide an immediate economic stimulus, and investment that can help set the stage for an economy built on energy efficiency and durable infrastructure. Economists generally agree that the legislation will save around 3 or 4 million jobs by 2010, while increasing economic output. Indeed, the Congressional Budget Office, Mark Zandi of Moody’s Economy.com, and White House economic advisers all project that the legislation will reduce the unemployment rate by around 2%. Extended unemployment insurance will allow 6.7 million people to collect benefits. Expanded COBRA and Medicaid insurance programs will keep 8.5 million individuals from losing insurance. Importantly, aid to state governments for Medicaid and education programs would shore up budget gaps and help prevent cuts to vital services.
While assisting those most at need during the economic downturn, extended unemployment insurance and state fiscal assistance also generate the most “bang for their buck" in terms of stimulus because they funnel money into the hands of the people most likely to spend it. Extended unemployment insurance generates an estimated $1.63 in economic activity for each dollar spent; aid to state governments generates $1.38. In contrast, though they act more quickly than spending measures, tax cuts generate less stimulus. The Making Work Pay, Child, and Earned Income tax credits will help keep more than 2.5 million Americans out of poverty and the American Opportunity credit will make 3.8 million more students eligible for a higher education tax break. These are important measures that will assist aspiring middle-class and middle-class Americans struggling to make ends meet. But the expansions are temporary and tax cuts, even when refundable and directed at the low-income individuals most likely to spend them, are less effective stimulus measures. Worst of all, though, are tax cuts for businesses like accelerated depreciation and carryback loss provisions that have little economic benefit.
Despite concern that the spending included in the American Recovery and Reinvestment Act will be delayed, perhaps a valid concern due to the legislation’s size and complexity, the Congressional Budget Office estimates that 85% of the spending will occur between 2009 and 2011. Indeed, funds for investment in infrastructure and energy efficiency, though perhaps more complicated to spend, are a critical step in longer term economic recovery. Beyond its stimulative value – infrastructure spending’s “bang for the buck” is $1.59 – the United States desperately needs new infrastructure to compete in the global economy. The American Society of Civil Engineers estimates that $2.2 trillion in infrastructure spending is now necessary. The $160 billion for infrastructure projects included in the legislation is a first step in addressing this deficiency. Similarly, spending on a modernized electricity grid, retrofitted low-income housing, and weatherized homes creates the framework for a future economy less reliant on fossil fuels and, indeed, based on green technology.
“[I]t is imperative that we design a stimulus package with the biggest bang for the buck and which leaves the nation’s balance sheet in the best position possible. Household tax cuts, except for the poorest, have no place in such a program. Neither do loss carry-backs, except when closely linked with investment. The one tax cut that should be included is a temporary incremental investment tax credit; it provides a big bang for the buck, encouraging firms to undertake investment today, when the economy needs the spending. The most immediate need is relief to states, without which we will see further cutbacks in employment and basic services; but beyond that, we need increased investments in education and technology as well as infrastructure, help to the unemployed, and a plan to address foreclosures.”
– Joseph E. Stiglitz, Columbia University Professor of Economics and Nobel Laureate, 1/24/2009
“The idea is to put people to work and to put them to work in ways that build on a stronger, long-term economic platform for future growth. Any economic recovery bill in our view passed by Congress should be bold enough to have a psychological impact [as] well as an economic one.”
– Deval Patrick, Governor of Massachusetts, 1/2/2009
The inclusion of tax cuts for businesses in the American Recovery and Reinvestment Act might have been a deft political maneuver, but these provisions will do little for middle-class Americans. Indeed, one such tax break, accelerated depreciation, provides only $0.25 in stimulus for every dollar spent. Though the business tax cuts make up only about 8% of the total cost included in the legislation, these funds would have been much better spent on mass transit, which was shortchanged both in general and in comparison to the funding provided for highway construction. Not only are transit authorities strapped for cash, meaning that government funds would be put to immediate use, but spending on new transit projects and equipment – even as ambitious as high-speed rail – would provide a cost-effective alternative to expensive and environmentally harmful automobiles. At the same time, the American Recovery and Reinvestment Act involves numerous government agencies and even more government programs. Ensuring that spending provisions are carried out quickly and efficiently is key to the legislation’s success.
Mandatory use of E-verify by contractors hired under the legislation is woefully misguided. E-verify, a program that purports to identify eligible workers, is not only deeply flawed, but does not solve the real immigration problem: an underground workforce that threatens the wages and working conditions of all workers. Far from solving the problem, E-verify exacerbates it by driving undocumented workers further underground and increasing violations of rights in the labor market.
We recognize that there is a limit to what this stimulus package can and should attempt to accomplish. But we must be mindful that many of the measures included in the legislation make up – temporarily – for problems that have not been addressed in recent years. Modernization of unemployment insurance, health coverage for unemployed workers, infrastructure investment, and, indeed, investment in science and health technology should be the beginnings of a new policy regime that works to include more Americans in the middle class, not a passing reprieve in a time of economic gloom.