With Economic Stimulus Package Details Nearing, A Virtual Feeding Frenzy

January 7, 2009 06:00 PM
 
via a special arrangement with Informa Economics, Inc.

 

Energy, food, rural and tax-incentive proponents lobby for their funding needs

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


Lawmakers and interest groups are focusing on one thing: getting whatever they can as part of what is expected to be an $800 billion economic stimulus plan over two years.

President-elect Barack Obama is slated to give a major economic speech today, so some additional stimulus details could surface.

The Senate Finance Committee will meet privately today to prepare for a markup of a bill (S 1) that will include language relative to the stimulus package. A similar markup in the House Ways and Means panel is expected next week. Tax cuts are expected to be a centerpiece of the economic stimulus plan.

Among the topics being pushed for the stimulus package:

-- More energy tax incentives for wind, clean coal, and renewable fuels including cellulosic-based ethanol.

-- Incentives for business investment beyond some of the ideas already signaled by Obama and his top aides. Existing likely provisions include a tax credit for companies that hire new workers and a provision that would allow money-losing companies to get instant refunds for taxes they paid over the past five years. Current law for such net operating loss (NOL) carryback allows companies to go back just two years. A litmus test being pushed by some lawmakers is the need to demonstrate that investment incentives will actually lead to economic growth. "Can you imagine the reaction in the country if the NOL carryback (goes to) big financial institutions like banks, who have refused to lend and have executives getting these big bonuses? And now there are going to be more tax breaks given to financial institutions who aren't going to make that money available?” said Rep. Ron Wyden (D-Ore.).

-- A one- or two-year alternative minimum tax patch. A one-year AMT patch could cost around $75 billion and thus add significantly to the eventual cost of the stimulus package which is already nearing $800 billion. The current patch does not expire until Dec. 31.

-- Infrastructure assistance. Transportation and Infrastructure Chairman James Oberstar (D-Minn.) outlined a plan Wednesday on how $85 billion in infrastructure projects he has recommended should be disbursed.

-- A major funding boost for food and nutrition programs -- the number of people receiving benefits under the Supplemental Nutrition Assistance Program/SNAP (food stamps) in October was 31 million, 3.9 million higher than one year earlier. The U.S. recession will drive the cost of the food stamp program, which helps poor people buy food, to $50 billion this year, up 27 percent from 2008, the CBO said on Wednesday. "The faltering economy has increased outlays for unemployment compensation and the SNAP,” CBO said. It forecast outlays of $50 billion for food stamps this year, compared with $39 billion last year. Jobless benefits would total $79 billion, up from $43 billion. Over the next decade, food stamps would cost an additional $86 billion and unemployment compensation an additional $54 billion than forecast in September 2008 because of economic reversals, CBO said.

-- Rural interests want to make sure the rural sector gets its fair share of infrastructure and other spending and tax incentive initiatives. House Armed Services Chairman Ike Skelton (D-Mo.) sent a letter to House Speaker Nancy Pelosi (D-Calif.) Wednesday urging that funds be directed toward existing rural programs outside of transportation infrastructure. Rep. Mike McIntyre (D-N.C.), chairman of the House Agriculture Specialty Crops, Rural Development and Foreign Agriculture Subcommittee, said, "Rural America must be a part of the economic stimulus package. At a bare minimum, we have to allocate sufficient funding to address the backlogs I have identified in USDA water and wastewater systems and community facilities programs. The backlogs total $1.4 billion in budget authority for a $4.8 billion program level." The House Agriculture Committee identified "urgent funding,” including $80 million in farm loan guarantees. Meanwhile, Senate Agriculture Chairman Tom Harkin (D-Iowa) is recommending that the economic recovery plan include $2 billion for rural water and wastewater treatment systems. House Agriculture Chairman Collin Peterson (D-Minn.) said aiding rural America is important to the national economy. "If you cause trouble in agriculture, you're going to raise food prices,” Peterson said. "That'll be the effect of that.” House Agriculture Appropriations Subcommittee Chairwoman Rosa DeLauro (D-Conn.) said Congress should make rural investments, such as expanding broadband service, that simultaneously provide short-term relief and long-term economic sustainability. "That's the area where it's least available,” said DeLauro, co-chairwoman of the House Democratic Steering and Policy Committee. "Teleconferencing, telemedicine, long-distance learning — those are all good jobs.”

-- Housing market aid and incentives. Sen. Kent Conrad (D-N.D.) said the stimulus package should include a tax credit of about $7,500 for home buyers and possibly an interest rate buy-down program that would help lenders offer mortgages at lower rates. "To think that we're going to have a package of economic recovery that does not address housing adequately, I think, would miss the boat,” he said.

-- The $300 billion tax portion of the stimulus bill is expected to include a new income tax credit that would effectively eliminate the payroll tax on the first $8,100 of income, giving each worker $500, likely through changes in paycheck withholding.

-- Aid to states, especially to help them meet health care funding needs.

-- Assistance for unemployed workers.

-- Additional funding for military construction. Some proponents want to include up to $20 billion to the economic stimulus package to pay for needed, but unfunded, military construction projects.


Comments: The key to funding levels ahead is how soon the money can be used. That is why state officials and others are busy preparing proposals to show how their funding needs will be spent -- and when.

 


NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


 

 

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