January 16, 2009 in Nation/World

Stimulus plan includes tax cuts, big spending

Nearly 60 percent will go to local, state governments
By Janet Hook and Jim Puzzanghera Los Angeles Times

Key provisions


$87 billion in increased Medicaid funding, with more going to states with high unemployment

$39 billion for local school districts and public colleges

$30.3 billion for health insurance for the unemployed

$30 billion for highway and bridge construction

$27 billion to continue providing up to 33 extra weeks of unemployment benefits through the end of the year

$20 billion for food programs and to lift restrictions on the length of time people can receive food stamps

$20 billion for college and K-12 school construction, renovation, technology upgrades and energy-efficiency improvements

Tax Credits

$500 per worker and $1,000 per couple credit for families earning less than $200,000 a year.

Remove repayment requirement for $7,500 first-time home-buyer credit for homes purchased in first six months of 2009

WASHINGTON – Launching an initiative that could be the cornerstone of Barack Obama’s presidency, House Democrats unveiled an $825 billion spending and tax-cut plan Thursday to shore up the crippled economy.

The measure includes $550 billion for spending on infrastructure, science, energy and education programs over two years, and $275 billion in tax cuts for individuals and businesses. Nearly 60 percent of the spending would go to state and local governments and nonprofit organizations to pay for things such as schools and health care.

While the bill calls for more spending than the president-elect had proposed, and a smaller tax cut, it does include the signature tax pledge in Obama’s campaign platform: a tax credit of $500 for individuals and $1,000 for couples who earn less than $200,000 per year.

“This is a significant down payment on our most urgent challenges,” Obama said of the plan Thursday. Democrats said they hoped to enact the legislation by mid-February.

Republicans want the stimulus package weighted more toward tax cuts and immediately questioned whether the package included too many items that were not effective stimulus measures. Some said the bill was riddled with pet Democratic programs.

“This legislation appears to blanket government programs in spending with little thought toward real economic results, job creation, or respect for the taxpayer,” said Rep. Jerry Lewis of California, the ranking Republican on the House Appropriations Committee.

Republicans questioned the inclusion of funding for such programs as the National Endowment for the Arts, $850 million for wildfire prevention and $600 million for new cars for the federal government. Those are a far cry from the traditional economic-stimulus tools such as road and bridge construction, for which the bill allots $30 billion.

Democrats said the inclusion of such items reflected their expansive view of how the government could create jobs. Replacing government cars could help the auto industry, for example; hiring people to restore areas hit by wildfires could benefit the environment.

Rep. David Obey, D-Wis., chairman of the House Appropriations Committee, called it “the largest effort by any legislative body on the planet to try to take government action to prevent economic catastrophe.”

Robert Bixby, executive director of the Concord Coalition, a nonpartisan budget-watchdog group said: “These may be worthwhile things like health care, technology and scientific research. But these are all things that require some long-term strategy. I question whether shoveling money out the door in a stimulus bill is the way to do it.”

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