Facebook
Fark
Digg
Reddit
Stumble
charles dharapak / associated press
President Barack Obama sits with Google Chairman Eric Schmidt during a meeting with business leaders Jan. 28, 2009, in the White House.
Wednesday, Jan. 28, 2009 | 2 a.m.
Sun Archives
- Gibbons defends cuts, says critics have no alternatives (1-27-2009)
- Corporate tax break gains D.C. support (1-26-2009)
- Got stimulus? We’ve got a project list (1-17-2009)
Sun Blogs
President Barack Obama came to the Capitol on Tuesday to break bread with Republicans over his economic recovery plan, but his appearance did not win over Nevada’s two Republican lawmakers.
Sen. John Ensign said the spending proposed in the recovery package for Nevada and other hard-hit states is “obscene.” He would prefer more corporate tax cuts.
Republican Rep. Dean Heller pledged afterward to return to his office to review the economic package. But he doubted he would vote for it.
Economists are in overwhelming agreement that a vast rescue plan is needed. A new report shows the
$825 billion American Recovery and Reinvestment Act would save or create
4 million jobs and bring the unemployment rate down by 2.2 percent by the end of 2010.
Nevada is among the states that would benefit the most, according to an analysis touted by Democrats and written by a former adviser to Arizona Republican Sen. John McCain.
It says that the recovery package would retain or create 62,580 jobs in Nevada by the end of 2010, lowering the unemployment rate by 2.1 percent. Without federal intervention, the state’s now 9.1 percent unemployment rate will continue to climb.
Construction workers would see the biggest benefit nationwide, as money goes to build roads, renovate schools and develop renewable energy, according to the analysis by Mark Zandi, chief economist at Moody’s Economy.com and adviser to McCain’s presidential campaign.
Nevada would especially benefit, Zandi said. The construction industry has suffered from the housing bust and building slowdown on the Strip.
Nevada’s core industries of gaming and tourism would get a boost as people nationwide have more money. “Employment in the retail and leisure and hospitality industries, including restaurants, is lifted by the stimulus,” Zandi wrote.
The skepticism among Nevada’s Republican lawmakers comes as many members of Congress feel burned by the $700 billion Wall Street bailout the Bush administration rushed them to approve last year. Much of the money spent so far is not being appropriately accounted for. (Ensign voted initially for the bailout. Heller voted no.)
Obama’s proposal would sink the country further into debt at a time when the Bush administration left office with the federal deficit projected to hit a record $1 trillion in fiscal 2009. “We should be thinking about the debt,” Ensign said.
The challenge now for Democrats and the Obama administration is to decide to what extent they need to bring Republicans on board, and to what extent they will go it alone.
Nevada’s Democrats in Washington support the bill. With the party enjoying expanded majorities in the House and Senate, the plan could well pass without Republican votes.
Yet, Obama is striving to reach across the aisle. The new president held an impromptu talk with reporters as he left the Senate side of the Capitol on Tuesday, saying he realizes “we’re not going to get 100 percent agreement” — and might not even get 50 percent.
The proposal would assist Nevadans on various levels, giving most families a $1,000 payroll tax cut, beefing up unemployment benefits by $25 a week and extending the amount of time benefits can be collected, and subsidizing health care costs jobless workers pay when they keep employer-backed insurance through the COBRA system.
Nevada would receive funding for schools, public works projects and Medicaid, the program that provides health care to the poor, because more out-of-work families losing employer-backed coverage would turn to the state-run program.
Nevada’s Republican Gov. Jim Gibbons has embraced the package as a way out of the state’s dire budget situation — he has proposed a budget for the next biennium that contains deep cuts in spending.
Democratic Rep. Dina Titus released information Tuesday that shows the state would receive $291 million for highway, transit and water system projects — dozens of which are ready to begin construction immediately.
Titus also said $179 million would be available for the Clark County School District. Her suburban district has been among the fastest growing in the nation, and Titus issued a statement saying, “These critical funds in the recovery package will provide needed investments.”
Yet the state’s Republicans here remain unconvinced.
Ensign called spending in the package excessive. He said he prefers to see incentives for companies to create jobs.
Ensign generally supports lowering the corporate tax rate as part of the proposal. On Tuesday, he used his time with Obama to propose two corporate tax breaks — one to allow companies that make profits overseas to bring those home at a lower tax rate, and another to wipe away the tax companies pay when they restructure debt.
Obama committed to taking a look but made no promises, Ensign said.
Heller, too, said he wants to see a bill that gives entrepreneurs tax breaks to spur growth.
“I need a bill that creates jobs,” Heller said. “The best way to do that is to give relief to American families and small businesses.”
Yet Zandi, the economist, said more stimulus is gained by government spending than tax breaks — a belief shared by many economists. Every $1 spent on infrastructure spending translates to a $1.59 increase in the gross domestic product, Zandi said.
Some tax breaks are helpful, he noted, saying every $1 in payroll tax cuts under the bill would generate $1.28 in GDP. These tax breaks put money directly in the hands of those who could use it.
On the flip side, the trickle-down tax cuts many Republicans favor do not boost the economy as much, in Zandi’s analysis. Every $1 reduction in the corporate tax rate reaps just 30 cents in GDP growth, he wrote.
Similarly, every $1 saved by making permanent the Bush tax cuts on high-income earners or corporate dividends/capital gains generates less than 40 cents.
"More corporate tax breaks". That is GOP speak for funding the bottom line so that they will make a bigger profit for themselves and not pass it on to the workers or the cost of goods sold.
For the GOP, the have's get richer and the not's get poorer. Ronald Reagan is born again in trickle down voodoo polocies.
"Much of the money spent so far is not being appropriately accounted for."
Wow! Who could have seen that one coming??? Besides me, I mean.
Iraq: Much of the money spent so far is not being appropriately accounted for.
FEMA: Much of the money spent so far is not being appropriately accounted for.
...and the beat goes on.
Sorry President, the plan pretty much sucks. And I say that as somebody that supports and voted for you. Reid and Pelosi are a joke and need to be gone ASAP!!! Spending needs to be balanced with a cut somewhere, and my BEST idea is to rollback and credit card rate over 9.99% back to that point and freeze it until further notice. NO rebates, no tax cuts, we need to start paying up at some point. I would also suggest limits on how many new homes can go up until the current existing homes are bought up. It's time these idiot builders faced the music and waited until average Joe Citizen sold their house before the major builders went back to their build build build ways.
Harry and Nancy, you all make me SICK!!! I sure hope you and your children both use condoms, the country can't afford anymore losers like you two.
75,000 jobs were cut this week.
People are more important than ideology.
People need to eat, have shelter and medical care.
All the rest is garbage.
Take your passionate ideology with you to the unemployment line when it is your turn.
Until then, let others work, be it government created jobs or government stimulated economy related jobs.We need jobs not lectures.
This mess is not "just the irresponsibility" of the common masses-it is the "irresponsibility" of an economic ideology- at its worst- run amok.
No one should question those that are skeptical about stimulus II.
While the $700 billion TARP was set up to provide a less than 5 year loan liquidity program to keep the financial system viable and the money will be returned with interest; stimulus II will actual cost $825 billion ($1.3 with interest) in unrecoverable money.
At $825 billion the impact on the budget will be such that there is no second chance.
We are 14 months into the recession and most economists see that with the Fed Bank response (lower interest rate and liquidity) the natural cycle will bring about a weak trajectory up in late spring of 2009.
So want is the purpose of Stimulus II. Notwithstanding Harry Reid, Nancy Pelosi, and Paul Krugman there is no historical evidence (not the great depression or the Japans depression) that spending will stimulate the economy and so should be limited to help like unemployment payments. Lowering tax rates has a long history of stimulating the economy.
No question that throwing $825 billion at the economy will temporally stimulate it, but that disappears quickly when the checks stop.
But, all the stimulus II package talk is not yet addressing the source of the recession which is the housing origination, insurance, and securitization "process".
With lack of transparent processes in place, the economy tipped when extra money was taken out of the economy due to the summer import oil price rise and foreign lenders, and subsequently the hedge funds shorted the exposed banks in September 2008. By mid-September Hank Paulson was calling for a bailout and job losses accelerated in October.
Until the process (including process assurance and oversight) for home loan origination, loan insurance, and loan securitization is fixed the monetary and spending stimulus (while it may boost the economy short term) it will long term do nothing to tip the jobs and economy trajectory positive (and may be made worse with the additional debt burden).
Simply once into the tipping point activities the process failure leads to the liquidity failure, which leads to the jobs failure.
Obama is going to generate trillion dollar annual deficits.
He might even generate 2 trillion dollar annual deficits.
Most of this "stimulus" money will be a quick and short term high in the arm of the citizens. If the economy still tanks then what tap dance will they do then. Spend more money on cash welfare give away scams?
These trillion dollar deficits will evenutally create a financial mess that will make these days as the glory days of Obama.
This stimulus package has more pork than a slaugherhouse in Iowa.
If this is so needed by our country why can't Reid and Pelosi reign in the pork.
Why hasn't Obama reigned in the pork.
This is why our country is failing.
Even Bush didn't stop the pork, for all who would attack me and say what about Bush. Now stick to the facts.