By David Canon, coauthor of American Politics Today
Congress enacted the economic stimulus package, the “American Recovery and Reinvestment Act,” into law a little over a month ago. At the time the law was being debated in Congress, there was broad agreement among economists and political leaders that something needed to be done to jump-start the economy. Bank lending had ground to a halt, consumer spending cratered, thousands of home mortgages were being foreclosed and tens of thousands of jobs were being lost every week. However, there were sharp disagreements among Democrats and Republicans over how to address these problems. In the end, not a single House Republican and only three Republican senators voted for the Recovery Act. In American Politics Today we emphasize the fact that “politics is conflictual,” but many of our students have wondered how there could be so much conflict over what to do when it seemed to be so clear that the government needed to act.
- Create or save more than 3.5 million jobs over the next two years;
- Take a big step toward computerizing Americans’ health records, reducing medical errors, and saving billions in health care costs;
- Revive the renewable energy industry and provide the capital over the next three years to eventually double domestic renewable energy capacity;
- Undertake the largest weatherization program in history by modernizing 75 percent of federal building space and more than one million homes;
- Increase college affordability for seven million students by funding the shortfall in Pell Grants, increasing the maximum award level by $500, and providing a new higher education tax cut to nearly four million students;
- As part of the $150 billion investment in new infrastructure, enact the largest increase in funding of our nation’s roads, bridges, and mass transit systems since the creation of the national highway system in the 1950s;
- Provide an $800 Making Work Pay tax credit for 129 million working households, and cut taxes for the families of millions of children through an expansion of the Child Tax Credit;
- Require unprecedented levels of transparency, oversight, and accountability.
What’s not to like? Renewable energy, education, job creation, and rebuilding the infrastructure are all supported by large majorities of Americans. So why were Republicans nearly unanimous in their opposition? In our view, it was a combination of political calculation and honest policy differences.
On the political side, Republicans decided to go “all in” on a gamble that the economy would still be in trouble in 2010 and that they could make huge gains in the midterm elections by blaming Obama and the Democrats for our economic woes. Of course, if the stimulus package does get the economy going, they will not be able to share the credit
On the policy side, Republicans believed that too much of the money was going to spending and not enough to tax cuts. About 37% of the package is to be devoted to tax cuts ($288 billion), 18% ($144 billion) is going help the states (almost all of the state aid is going to Medicaid and education), and 45% ($357 billion) is allocated to federal spending on the policies outlined above. They also objected that some of the money, such as more money for unemployment benefits, came with strings attached. For example, to get the additional federal money, states would have to agree to give unemployment benefits to part-time workers who had been laid off (which some states do not do). Several Republican governors have said that they will not accept the federal money under those conditions because they would have to raise taxes to cover the new benefits after the federal money ran out in three years. Democrats reply that those states could simply revert back to their old policy after the federal money is gone, and in the mean time unemployed workers will get much-needed help.
These same battle-lines are now being drawn over President Obama’s $3.6 trillion budget. Some moderate Democrats are balking at the huge budget deficits and agreeing with Republicans that more fiscal restraint is needed. Overall, political conflict is a necessary part of passing important legislation such as the stimulus package and the budget. It forces each side to justify its positions and in most cases the resulting policy is stronger and better because of the tough discussion, debates, and negotiations.
News summary of the stimulus package from mid-February, just before President Obama signed it into law:
