Obama Stimulus Measure Begins Shaping UpSeptember 7, 2010 - by Donny Shaw
I’m down in D.C. today and tomorrow for the excellent Gov 2.0 summit, hearing from a great bunch of folks from both inside and outside government on how the internet and open data can be harnessed to bolster transparency and efficiency, and improve governance through a more participatory civic infrastructure. You can follow along on Twitter using the #g2s hashtag and you can stream some session live here.
Before I dive too far into the exciting world of gov 2.0, here’s a quick update on the Obama stimulus measure that is probably going to keep Congress busy from when they return to D.C. on Monday until they adjourn sometime in Septemeber.
First and foremost, the payroll tax holiday, an idea favored by most Republicans and that probably would have been swallowed without too much bitterness by most Democrats, is now, reportedly, off the table. At this point, here’s what the new Obama stimulus package is looking like:
1) Allowing businesses to deduct 100% of their equipment purchases from their taxes through 2011. This woud be the deepset business reinvestment incentive in recent history. According to the NYT, it would cost the federal govenrmenta bout $200 billion in lost revenues, $170 billion of which is expected to be recouped eventually through revenue gains when/if the stimulus measures start turning the economy around.
2) Making the research and development tax credit permanent. This credit has been in place, nearly constantly, for the past 30 years. But it’s always been done through temporary extensions, and the politics and uncertainty involved in it have put a bit of a damper on its effect. Making it permanent should make businesses more confident that they can predict the costs associated with investing in innovation.
3) New infrastructure investments. Obama yesterday announced that he plans to call for $50 billion in new spending for infrastructure projects — roads, trains, and runways — to be organized through a new “infrastructure bank” that would give priority to projects that are able to attract private funds. To pay for the projects, he is proposing to eliminate some oil and gas company tax breaks and loopholes that have been in place since the late 90’s.
Now, it’s hard to imagine this infrastructure spending not being lopped off in the Senate. Assuming Sen. Ben Nelson [D, NE] is a no, if all other Democrats voted in favor of it (and that’s a big if), they’d still need 2 Republican votes to break an inevitable filibuster. But the ususal Republican cross-overs haven’t been biting on Dem stimulus plans for the past few months. And as the campaign season begins in earnest, Republican cross-over votes are even less likely.
Plus, it’s already been shown that the plan to end oil comapny tax breaks can’t survive on its own. In June, Sen. Bernie Sanders [I, VT] brought an amendment to end the tax breaks to a vote and it failed miserably, 35-61. Twenty-one Democrats and all Republicans voted against it.
Also noteworthy is one thing that has not been floated for incluson in the package — extending unemployment benefits. The CBO recently found that unemploment benefits are the most stimulative form of government spending, more than twice as stimulative as equipment investment credits and significantly more effective than infrastructure spending. Yet, after Nov. 30, none of the millions of long-term unemployed will be eligible for insurance payments. Not to mention the millions of 99ers who continue to be ignored.