Barack Obama has been president for almost a month and the change relative to the last eight years is strikingly evident. Policies and ideas never considered are already enacted and taking form. However, this triumphant shift has the meager Republican Party frightened of being completely steam rolled. On Tuesday, the $789 billion dollar stimulus package passed with zero Republican votes in the House and three in the Senate. The bill gives significant funds to renewable energy and energy efficiency programs, school construction, science and technological research and other government services like unemployment insurance. The final bill was watered down due to Republican dissent, which created a weaker bill with more tax cuts and cutting $80 billion in overall spending.
On the other hand, large sums of money are going to areas of the economy that are in dire need, some of which, like renewable energy have never received a fraction of the attention they are now. So even though the bill was severely tarnished, relative to the last eight years there is a lot to look forward to.
The overall idea of the package is absolutely prudent considering the state of the economy, albeit, much of the spending is just resetting funding levels slashed by the previous administration. In the last eight years unemployment insurance, healthcare, and state and local governments funding has experienced huge cuts all helping to deep the recession. Specifically, $40 billion to extend unemployment benefits, $48 billion on transportation projects, $24 billion for unemployed health insurance (COBRA) and $50 billion for energy programs, focused chiefly on efficiency and renewable energy. The bill does take notable steps in the right direction in terms of funding for science and research, and renewable energy however; significant cuts were made in the most effective spending measures.
A total of about $80 billion was cut from the bill in the end with the most drastic cuts coming from state aid, which cut $40 billion and school construction, which lost $16 billion. Both of which can create jobs immediately as well as sustain them in the longer term. Other key cuts include $600 million cut in No Child Left Behind, and halving of the funds for federal building energy efficiency down to $3.5 billion.
Critical cuts came in the most effective programs, things that can be distributed and used quickly like money to state governments. What is worse, approximately $70 billion dollars worth of tax cuts were added to the bill which will be ineffective at creating jobs or any other stimulus. Food stamps were thinned down, as well as unemployment benefits; both services that can be distributed quickly and heavily impact families’ ability to remain solvent. Last week, almost 4.8 million people collected unemployment insurance, the highest weekly number in 40 years. The bill includes $282 billion in tax relief, mainly for the wealthy, which will probably not be spent, and $507 billion in spending.
The right side has relied on a faith based ideological economic theory as the means to oppose government spending and promote tax cuts. The clichés and rhetoric chanting for less government interference are laughable, especially at a time like this. As President Obama has repeatedly noted, the theories and policies of the past eight years have been directly responsible for the current state of the economy. Less government has lead to less everything. Lower median income levels in 2007 than in 2000, home prices dropped 16 percent in a year, 46 million people under the age of 65 do not have health insurance, 3.5 million fewer people have jobs today than in the beginning of 2008. The government has done less and we now have less, of everything. In tandem with less government regulation is the supposed worry by Republicans about the deficit and over spending, however spending billions on the Iraq War seemed to be okay for the deficit worriers. The arguments against spending and for tax cuts are absolutely incoherent and intolerable considering the magnitude of this crisis. Tax cuts do essentially nothing to stimulate the economy and get people working in the short term, because a lot of that money would be saved by the wealthy whereas direct government spending is spent right away creating jobs as well as a useful resource, such as schools and bridges.
Some have become worried that this has struck at the momentum of the Obama administration and will chip away at its effectiveness to lead. Indeed, significant cuts in key spending areas were made and the allusions of bipartisanship disappeared in the wake of the political process, but the strength of the Obama administration has the right clinging to whatever they can. As a result, the American economy is being short changed by a weak and slow package. The economy is in its worst shape in decades and is going to get worse for longer than people realize. The only tool left is government spending that matches the magnitude of the problem, which is huge.
Overall, the stimulus plan falls short in size, timeliness, and targeting. However, the loss of recognition for the massive shift our country is making relative to where we were heading until a month ago would undermine the progress we have made. Big important changes are leading the country in a new direction. Proactive ideas about health care, America’s role internationally and the way we produce and consume energy were dreams in recent years, and now they are actually happening. While it is easy to become furious with Republicans erratic and baseless arguments, the fight for a working government that provides social safety nets and desired public goods has been long coming and it must not be taken for granted. The opportunity to finally fix these much-neglected sectors of our economy is inspiring, and yes hopeful.
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