Hill Republicans have spent the last few days dwelling on a CBO report showing that less than 40 percent of the $350 billion worth of spending projects in the House stimulus bill would take effect in the next two years. (The overall bill includes other items like tax cuts and aid to states and runs about $825 billion.) I heard two or three GOP senators raise the issue at Tim Geithner's confirmation hearing, and several of the usual suspects held a press conference yesterday to hammer the point home. It's the kind of critique that, if unrebutted, could become an effective rallying cry.
Which is why it's heartening to see the White House respond so nimbly. I had a conversation a little while ago with Sen. Kent Conrad, one of the Democrats concerned about the CBO report. Conrad told me he spent yesterday having conversations with four top White House aides--Rahm Emanuel, Larry Summers, Peter Orszag, and Pete Rouse--who assured him that at least 75 percent of the overall bill (that is, infrastructure projects, tax cuts, aid to states--everything) would hit the economy in the first 18 months. Conrad seemed pretty satisfied with this; I suspect it'll defuse the GOP assault, too.
Update: Just to clarify: The White House wasn't saying the CBO report was wrong, just that Obama wouldn't sign a bill that didn't deliver at least 75 percent of its punch in the first 18 months. (That may, in fact, be true of the current House bill, since the White House is referring to the overall $825 billion bill and the CBO report only refers to the $350 billion to be spent on "appropriated" projects. In which case the benefit of this assurance is basically rhetorical.)
--Noam Scheiber
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COMMENTS (10)
In California, we're facing a gov't shutdown in March if there's no budget that will address a shortfall of IIUC s.t. like $140B. We've already been notified that the state will withhold ie expropriate our tax refunds, which are huge in a state with a 9.6% marginal income tax rate, and can expect to see that rate go up another 2 percentage points. Vendors will not be paid. Schoolteachers will not receive paychecks after March. Schools will shut down.
So a modest proposal: give a very large %, s.t. >50%, of the total stimulus to the states in the form of block grants and enable them to
-- pay their vendors
-- meet their short-term payrolls for teachers, cops, doctors, nurses
-- pay the tax re ... view full comment
In California, we're facing a gov't shutdown in March if there's no budget that will address a shortfall of IIUC s.t. like $140B. We've already been notified that the state will withhold ie expropriate our tax refunds, which are huge in a state with a 9.6% marginal income tax rate, and can expect to see that rate go up another 2 percentage points. Vendors will not be paid. Schoolteachers will not receive paychecks after March. Schools will shut down.
So a modest proposal: give a very large %, s.t. >50%, of the total stimulus to the states in the form of block grants and enable them to
-- pay their vendors
-- meet their short-term payrolls for teachers, cops, doctors, nurses
-- pay the tax refunds they owe their citizens
In California ensuring the above obligations are met would probably avoid the withdrawal of at least $10B from the economy... in the next 3 months _alone_. Block grants would ensure the stimulus flows into the economy in the next 6-12 months, not 12-24 months.
Also, there's far, far less potential for huge sums disappearing into idiotic local real estate projects like bridges to nowhere, shopping malls in South Dakota etc.
Why is this not being discussed?
tep, I'd be in favor of your proposal, provided none of the money went to California. Pass a constitutional amendment undoing all past ballot initiatives that in any way govern the state budget, and eliminate the ability to legislate revenue or expenditures by referendum, and then Cali can come back and beg for federal bailouts. Until then, it's really not my problem that I live in a state where it's possible to conduct the state's finances like a grown-up and Californians do not.
(OK, I don't really mean that. But really, California's budget crisis is particularly acute relative to other states in large part because of the stupid, demagogic anti-tax propositions Californians have been passi ... view full comment
tep, I'd be in favor of your proposal, provided none of the money went to California. Pass a constitutional amendment undoing all past ballot initiatives that in any way govern the state budget, and eliminate the ability to legislate revenue or expenditures by referendum, and then Cali can come back and beg for federal bailouts. Until then, it's really not my problem that I live in a state where it's possible to conduct the state's finances like a grown-up and Californians do not.
(OK, I don't really mean that. But really, California's budget crisis is particularly acute relative to other states in large part because of the stupid, demagogic anti-tax propositions Californians have been passing for the last forty years. I just don't have a lot of sympathy when polities face the inevitable consequences of their own shortsighted policy choices. And short-term federal aid will do nothing to help California solve its catastrophic structural problems. The state needs a new constitution, and until it gets one, any federal assistance is throwing good money after bad. There are times when we have to throw good money after bad, and this is probably one of them, but federal aid to California will really stick in my craw.)
Anti-tax? WTF? CA has outrageously high income taxes and a very high sales tax as well. Plus very high property taxes in my town. The tax break you refer to applies to old-timer property owners, many if not most of them house-rich and cash-impoverished. Most importantly, CA receives less than it sends to Washington. IIUC the imbalance is greater here than in almost any other state.
Anti-tax? WTF? CA has outrageously high income taxes and a very high sales tax as well. Plus very high property taxes in my town. The tax break you refer to applies to old-timer property owners, many if not most of them house-rich and cash-impoverished. Most importantly, CA receives less than it sends to Washington. IIUC the imbalance is greater here than in almost any other state.
Tep, Rhubarb is right - we Califorinans demand everything for nothing.
What is state tuition now, 8 grand a year? That's ridiculous. They should double or triple that tomorrow, that is if they can handle the thousands of marching protesters that burst forth when they are so much as asked to pay for a 100 parking pass.
The Golden Era is so over its not funny and too many don't get that. Have you ever checked out the public broadcast station facilities in LA? They look like an IM Pei building, with a state of the art gym, gourmet cafateria, free parking, etc. Nice work if you can get it too. Look, my Dad is a budget administrator for the whole state sy ... view full comment
Tep, Rhubarb is right - we Califorinans demand everything for nothing.
What is state tuition now, 8 grand a year? That's ridiculous. They should double or triple that tomorrow, that is if they can handle the thousands of marching protesters that burst forth when they are so much as asked to pay for a 100 parking pass.
The Golden Era is so over its not funny and too many don't get that. Have you ever checked out the public broadcast station facilities in LA? They look like an IM Pei building, with a state of the art gym, gourmet cafateria, free parking, etc. Nice work if you can get it too. Look, my Dad is a budget administrator for the whole state system headquartered at at CSULB. His staff was all handed out new blackberries twice a year. It took him two days of phone calls to cancel the contract. He made everyone give them back, he was sick of it.
He was sent 7,000 dollars after the last earthquake, when he'd made no claim to the state. He tried to send it back an no one would take it.
There have been other tax measures that didn't pass, the 1 cent increase in sales tax to pay for cops for example, no dice - how crazy is that. The LAPD has 7,000 cops. The NYPD has 46,000.
California needs a Leon Panetta type to come in and ignore everyone, start over with the budget. Arnie gave up a long time ago. He's been a real disappointment - he's become lazy as hell. I'd like to see Maria give it a shot though.
California has the most inequitable property tax system in the country, I think. Of course the taxes are astronomical on people who bought their property recently. That's because the people who bought their property 30 years ago pay almost nothing. My in-laws pay $600 per year in property taxes on a house they could have sold a year or two ago for about half a million dollars. If they had, the new owners would have paid thousands per year, not hundreds per year.
Arnie had no chance (Panetta would have no chance). California has to tear up its Constitution and start over; there is too much crap in there from decades of initiatives to save it. So says this ex-Californian.
California has the most inequitable property tax system in the country, I think. Of course the taxes are astronomical on people who bought their property recently. That's because the people who bought their property 30 years ago pay almost nothing. My in-laws pay $600 per year in property taxes on a house they could have sold a year or two ago for about half a million dollars. If they had, the new owners would have paid thousands per year, not hundreds per year.
Arnie had no chance (Panetta would have no chance). California has to tear up its Constitution and start over; there is too much crap in there from decades of initiatives to save it. So says this ex-Californian.
Wandrey, I think the key word in your BlackBerry anecdote is "Administrator", not "California". They don't hand out free BlackBerrys to the faculty, that's for sure.
Wandrey, I think the key word in your BlackBerry anecdote is "Administrator", not "California". They don't hand out free BlackBerrys to the faculty, that's for sure.
Well, we're the ones delivering most of the 21st c the infrastructure-- networks and backbones and search engines and gear of all sorts-- that everyone says is the key to saving the economy and preserving our standard of living. It's not designed in MA or TX or NC; it's mainly designed and brought to market from CA.
And the people within CA who are doing the designing and marketing and running of these corporations are for the most part recent arrivals who paid >$700k for their houses and who pay absurd taxes. IOW, those who are the most productive, of wealth-- CA technologists and tech managers-- are bearing essentially ALL of the burden for the other 98% or so.
And now you're proposing ... view full comment
Well, we're the ones delivering most of the 21st c the infrastructure-- networks and backbones and search engines and gear of all sorts-- that everyone says is the key to saving the economy and preserving our standard of living. It's not designed in MA or TX or NC; it's mainly designed and brought to market from CA.
And the people within CA who are doing the designing and marketing and running of these corporations are for the most part recent arrivals who paid >$700k for their houses and who pay absurd taxes. IOW, those who are the most productive, of wealth-- CA technologists and tech managers-- are bearing essentially ALL of the burden for the other 98% or so.
And now you're proposing that this 2% bear an even greater share of the burden? Of course we're doing our part, but it's stupid and wrongheaded to be funneling resources away from silicon valley's most productive people toward corn farmers, agribusinesses, midwestern real estate developers etc. That way stagnation (if not rapid decline) lies.
Peter Baker reports that Republicans (or at least Senate Republican leader Mitch McConnell) emerged from
Peter Baker reports that Republicans (or at least Senate Republican leader Mitch McConnell) emerged from
Teplukhin, California voted in the tax inequities itself, with Propostion 13. Entirely self-inflicted.
Teplukhin, California voted in the tax inequities itself, with Propostion 13. Entirely self-inflicted.
You may recall how, the week before last, Republicans were up in arms over a CBO report showing that
You may recall how, the week before last, Republicans were up in arms over a CBO report showing that