The consensus couldn't be clearer: the US economy needs help, and it needs it fast. As the market wallows in uncertainty, shakers in New York and Washington alike are preaching the need for fast action to stimulate the markets.
Barack Obama, who has been quick to aide the troubling economy, promises to pass something by February 16th. Myriad problems have arisen however, as his administration and Senate Republicans have begun discussing what exactly that something should be. The Obama administration, together with the Democratic congressional leadership team, has assembled a massive spending bill designed to jolt the economy back to health. This $800-$900 billion plan is unprecedented in size and scope, amidst an economic slump many Democrats argue is equally unprecedented in severity.
Many Republicans, however, say the bill goes far beyond reasonable spending, and they seem to be right. As the matter goes to debate on the Senate floor today, Republican leader Mitch McConnell is urging his fellow lawmakers to seek a "Timely, Temporary, and Targeted" measure. And while the Obama plan is certainly timely, its measures go far beyond a responsible stimulus.
Surprisingly, the two parties don't seem to be butting heads on providing aide to those with low income. In fact, both sides are advocating relief. In a press conference this morning, McConnell reasoned for "tax relief for middle and low income taxpayers." The Obama Administration could not agree more. "Nobody is trying to keep a package from passing, we're trying to reformulate it" said the the Republican Leader. While the sides agree on the necessity of speedy relief to those most in need, the republicans are right to call for the pork to bleed out of this bill.
Unfortunately, many measures in the current plan will do little to invigorate the economy, but will needlessly accelerate spending in a time of record debt. A proposal to spend $2.25 billion on national parks, currently in the Democrat's bill, will not help the economy. Measures proposed by House Speaker Nancy Pelosi, and outlined in an interview with ABC, to route money to family planning services, were wildly out of line. $2 Billion for child care subsidies, while potentially helpful to the economy over time, will certainly not lead to the short term spark the economy needs.
Instead of becoming the spending bill to end all spending bills, the proposed stimulus needs to address the specific and immediate needs of the economy. It must:
1. Provide tax relief to those with middle, and low incomes, to restore consumer spending and confidence.
2. Outline specific measures to relieve financial institutions of their troubled assets.
3. Provide direct support to the commercial paper markets.
4. Backstop foundering industries with direct support. Student loans and healthcare are among those who should recieve help.
5. Allow for specific tax breaks for businesses, especially those which encourage them to reduce their debt.
In a time when partisan bitterness could easily flare up on either side, the debate thus far has been surprisingly civil. As the matter moves into debate today, Democrats should remember that the President has emphasized the need for bipartisan support for the bill.
Republicans, for their part, should keep all of their procedural options open, to ensure the final stimulus package is one which does what everyone wants it to do: delivers relief to consumers, strengthens businesses, and shores up the overall economy. If not, the stimulus could end up being the economy's death by 1,000 checks.