The $789 billion stimulus package Congress is expected to approve in the next day or two is far from perfect. There are too many tax cuts that will do little to revive the economy, and there is too much spending on projects that may be worthy but won't provide much immediate relief. Despite these warts, the package offers significant help to struggling Americans, and it will be a reasonable investment if it creates or protects as many jobs as supporters project.
The grumbling from Republicans who want more tax cuts and Democrats who want more spending should be kept in perspective. This is the worst economic crisis since the Great Depression, and this is the largest government response to one since the New Deal. Despite the arguments over priorities and the disappointing lack of support from Republicans, it is a significant accomplishment for Congress and for President Obama — who has been in office all of three weeks. And yet the stimulus package is just one of the tools that will be needed to rebuild the economy.
With the national unemployment rate at 7.6 percent and rising, the package includes several important provisions to help the jobless. It continues the extension of unemployment benefits to up to 33 weeks, modestly increases the benefits and suspends the taxation of some. Food stamp benefits are increased, and there is a 60 percent subsidy to help pay health insurance premiums under COBRA. That is particularly important, because millions of workers who have lost their jobs will have a better shot at being able to afford to keep health coverage.
While Florida and other states facing budget shortfalls will not get as much money as they had hoped, there is an additional $87 billion for Medicaid. That will free state tax dollars to help fill holes in education and elsewhere. Another $46 billion will go to transportation projects, a number which should have been higher. Instead, billions were allocated for improving the national electric grid and creating electronic health care records. Those are worthy projects, but they will not provide an immediate economic boost and should have stood on their own merits in other legislation.
More than one-third of the package is devoted to tax cuts, and they are not all Republican initiatives. Obama insisted on a refundable tax credit for lower- and middle-class taxpayers that was one of his campaign pledges. It will be $400 per worker instead of the $500 he proposed, but it should have been dropped completely. Most taxpayers can be counted on to save the money or pay off bills. Similarly, the $70 billion aimed at sparing middle class families from paying the alternative minimum tax has strong bipartisan support. It is good policy — but it does not belong in the stimulus package that is supposed to create jobs and pay for projects that can be built within the next two years.
Despite these drawbacks, the stimulus package is a critical step in the road to economic recovery. It is projected to create or protect 3.5 million jobs over two years, about as many jobs as have been lost since the recession began. Without jobs, the housing market and consumer spending are not going to rebound. If Republicans vote against it, they should be prepared to explain why to their constituents who face losing their jobs, their homes and their hope.