Rep. Mike Michaud(D-Maine)
On January 28th, the House of Representatives passed H.R. 1, the American Recovery and Reinvestment Act. The House-passed bill is not perfect, but it will create millions of jobs at a time when our nation desperately needs them. Though I supported it, I had reservations about the makeup of the package and its effect on the nation’s deficit. Hopefully, as the package moves through the Senate and a House-Senate conference, there will be opportunities to improve it. On the heels of House passage, the Associated Press reported that the number of Americans continuing to claim unemployment insurance for the week ending January 17th was a seasonally adjusted 4.78 million, the highest on record dating back to 1967. That’s worse than most economists expected.
This is the bleakest economy we’ve faced since World War II. In all, 2.6 million American jobs were lost last year alone. It is important for Congress to work with the Administration to help stop the job losses and turn this economy around.
Many of the investments made in the House-passed recovery package provide a significant return on taxpayer investment. For example, every $1 billion invested in transportation infrastructure creates about 35,000 jobs and up to $6 billion in additional gross domestic product. The House-passed bill invests a total of $46 billion in infrastructure nationwide. That funding is distributed to the states through standard formulas, with Maine receiving $194.56 million. This is good, but I think more robust investments are called for given our desperate economic times.
The House package also extends unemployment benefits and increases food stamps. These are investments that I also strongly support. These programs deliver help to those who most need it. They also stimulate the economy because beneficiaries will quickly spend the additional funds. In fact, for every dollar spent on unemployment insurance benefits, $1.63 in economic activity is generated, and for food stamps it is $1.73 for each dollar invested. The extension of unemployment insurance alone will benefit 70,629 Mainers.
I also worked with my colleagues on the House Small Business Committee to make sure that small businesses benefited from the economic recovery package. Small businesses are the backbone of our economy and their success is crucial to getting us out of our economic downturn. As passed, the provisions in the bill for the Small Business Administration (SBA) will yield $13 billion in additional investment and lending for small businesses. Putting this fresh capital in the hands of small business owners will result in the creation or retention of 400,000 jobs, more than 15 percent of the jobs the economy shed last year. The bill also targets $30 billion in tax relief to small businesses, which will also help spur growth.
American families will also get tax relief through a refundable tax credit of up to $500 per worker ($1,000 per couple filing jointly), phasing out at $200,000 for couples filing jointly and $100,000 for single filers.
While these provisions will help stimulate our economy quickly, some spending should not have been lumped into this package. I opposed a procedural motion pushed by congressional leaders which designated all of the funding in the stimulus package as an emergency, thereby avoiding pay-as-you-go budget rules. Despite voting against this motion with a bipartisan group of my colleagues, it narrowly passed. As such, the cost of the entire economic recovery package will be funded by borrowing.
Most of the spending in this bill is emergency in nature – our economy is truly struggling. But some of it should have been appropriated through the normal budget process, where we can make sure the provisions are paid for and that we are not adding unnecessarily to our ballooning budget deficits. We need to get our nation’s fiscal house in order and live by a budget, just like all American families must. If not, we will cripple the ability of future generations to ever get ahead.
We have a lot of work to do in the weeks and months ahead. Though not perfect, the combination of targeted investments and tax incentives in the economic recovery package represent a step in the right direction.
