What will a $575 billion spending spree buy?
The details will continue to roll out as analysts actually get a chance to read the 1,071 page bill was which voted on before anyone had a chance to read the whole thing. The bill, which was passed with a warning of urgency, will be signed in Denver by Barack Obama on February 17th.
Here is some of what we've learned.
Unlike the trickle out credits for employed persons, these tax credits will probably be in the form of checks since retirees do not generally have employment tax withheld.
State and local governments will get $53.6 billion to fund school renovations and prevent cutting education services. Renovation projects should mean increased sales of materials and new work for contractors. Critics point out that some schools – like the Los Angeles Unified School District - that were poised to streamline their budgets by strategic cutting - scrapped their plans to eliminate wasteful spending based on the promise of billions of dollars in taxpayer money. That was a missed opportunity to streamline.
$15.6 billion will be used to raise the maximum Pell Grant by up to $500 each.
This technology expansion mandates that every individual's health records be made electronic. Critics say this is a surreptitious move in the direction of socialized medicine by placing government in authority between the patient and the doctor.
Michael Hicks, director of the center for Business and Economic Research at Ball State University told USA Today that this item in the stimulus act will likely have some power to stimulate, since people on unemployment will probably spend the additional funds rather than saving it.
$50 billion is aimed at providing a clean-energy future. This includes $5 billion for the weatherization of one million modest-income homes (expected to save homeowners about $350 per year), and $6.3 billion for insulation, windows, and furnaces in federally backed and public housing projects. Some credits are available for higher-income households as well. Clean-energy measures are expected to save $3 in electricity for every dollar spent. Eleven billion dollars will be spent to upgrade the nationwide transmission grid to move renewable energy from rural areas to cities. Joel Kurtzman of the Milken Institute economic think tank told USA Today that $11 billion is unrealistic for this project which, he estimates will cost closer to $100 billion. Another critic, Kenneth Medlock of Rice University's Baker Institute was quoted in USA Today as saying the planned grid improvements will take years and will not give rise to jobs in the short-term.
$7 billion will be spent for broadband deployment into rural U.S. markets. The Obama Administration lists high-speed Internet as part of infrastructure, an essential service "just like our highways."
Controversial issues within the stimulus plan -- to name just a few
Bloomberg News reports that financial institutions that receive federal funds will be expected to follow stricter rules for hiring foreign workers under the H-1b visa program. These are the visas that U.S. businesses seek in order to hire highly trained workers from overseas. This provision prohibits companies seeking H-1b visas from dismissing employees in similar positions for 90 days before and 90 days after requesting the visa. The company will have to prove that, before hiring overseas, they made every effort to recruit a U.S. worker first. Critics point out that this measure allows the government to limit the ability of a business to do what it deems necessary to earn a profit. It may also force American businesses to hire or retain substandard workers.
Construction projects that receive federal funding will be required to "buy American" when purchasing materials, restricting the use of foreign steel and other products on infrastructure. This provision will not require that project managers violate international trade agreements. Some warn that it may be a return to the disastrous days in 1929 when the Smoot-Hawley Tariff Act forced the country into the depths of financial recession.
Critics of the entire bill ask - if immediate passage of this bill is as important as we were told, requiring its passage before anyone had time to read it – why did Obama allow it to be filled up with entitlement spending and health reform proposals? These plans are not stimulative and will involve either tax increases or benefit cuts or both. The health care technology reforms were part of the plans laid out by Tom Daschle, who withdrew his nomination for Secretary of Health and Human Services after it was made public that he'd failed to pay his taxes. His political ambitions may have been spoiled, but it appears his push for socialized medicine got the nod from the Democrats in Congress who passed this stimulus plan. Daschle advocated getting the "desired reforms" by hiding them in an unrelated bill – such as this one - where they would be less likely to be noticed by the public and passed before there would be time for public outcry.
You can read the complete text of H.R. 1, the American Recovery and Reinvestment Act of 2009.
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