Democrats May Not Call It ‘Stimulus’ but Cost of Relief Proposals Adds Up
Taken together, economic proposals by Democrats to provide relief could add up to nearly $200 billion, looking a lot like another economic stimulus package.
(FOXNEWS) If it looks, feels and sounds like a stimulus, then is it a stimulus?
Democrats say no. They call their growing list of proposed economic relief efforts an extension of Obama’s original $787 billion stimulus package, passed by Congress earlier this year with minimal Republican support.
But the price tag for these new proposals is adding up.
Democrats are considering extending unemployment and health benefits, as well as extending and perhaps expanding a popular tax credit for first-time home buyers and creating a new credit for companies that add jobs.
Extending unemployment benefits through 2010 would cost about $100 billion, according to the liberal Center on Budget and Policy Priorities.
It’s unknown exactly how much it would cost to extend subsidies for laid-off workers to help them keep the health insurance their former employers provided, known as COBRA. That’s because congressional leaders haven’t settled on the length of an extension, or how to pay for it. But the current program, which covers workers laid off through the end of the year, costs nearly $25 billion.
Extending the homebuyer tax credit to next summer would cost about $16.7 billion, economists say. It’s not clear how much the employer tax credit would cost. But a similar proposal that was dropped from the first stimulus package had a cost of $19.5 billion.
President Obama also wants Congress to approve $250 payments to more than 50 million seniors to make up for no cost-of-living increase in Social Security next year. The total cost: $14 billion.
Taken together, the proposals could add up to nearly $200 billion, looking a lot like another economic stimulus package.
But congressional leaders don’t want to call it that because about 60 percent of the initial stimulus package remains unspent.
Obama and other Democrats are adamant the stimulus package has lessened the effects of the recession, saving jobs that otherwise would have been cut. Nevertheless, the unemployment rate rose to 9.8 percent in September, the highest since 1983. A total of 15.1 million people are unemployed, and 7.2 million jobs have been eliminated since the recession began in December 2007.
Republicans cite these figures and Democratic proposals for relief efforts as evidence that the stimulus package failed.
Democratic leaders in Congress and the White House say they have no appetite for another big spending package that adds to the federal budget deficit, which surged to an all-time high of $1.42 trillion for the budget year that ended last month.
But they have begun to lay the groundwork for economic triage.
The House already has voted to extend unemployment benefits an additional 13 weeks for laid off workers in the 27 states where the jobless rate is 8.5 percent or above. Senate Democrats reached a deal last week to extend the benefits an additional 14 weeks in every state. Both proposals are paid for by extending a federal unemployment tax.
Several bills would issue extra payments to the more than 50 million Social Security recipients, to make up for the lack of a cost-of-living increase next year. One bill would set the one-time payments at $250, matching the amount paid to Social Security recipients and railroad retirees as part of the stimulus package enacted in February.
The payments would cost about $14 billion and would be paid for by applying the Social Security payroll tax to incomes between $250,000 and $359,000 in 2010. Currently, payroll taxes apply only to the first $106,800 of a worker’s income.
House Speaker Nancy Pelosi, D-Calif., said she is also considering a Republican proposal to allow money-losing companies to use their losses to get refunds of taxes paid in the previous five years. Under current law, most companies can only use current losses to get refunds from the previous two years.
“The issue of a net operating loss carryback to five years rather than two is an idea that has some currency,” Pelosi said.
Pelosi said she is also looking into extending and expanding a popular tax credit for first-time homebuyers. The credit, set to expire Dec. 1, allows first-time homebuyers to reduce their federal income taxes by 10 percent of the price of a home, up to a maximum of $8,000.
Pelosi said the credit could be expanded to people who already own homes, though she offered no details. Senate Majority Leader Harry Reid, D-Nev., has announced his support for extending the existing credit an additional six months.
“The question is, would that be just first-time homeowners or would you open it up to other purchasers of homes?” Pelosi said.
The program is scheduled to run for 11 months this year and cost a projected $6.6 billion. Extending or expanding the program would add to the costs.
Lawmakers are also working on proposals to award tax credits to companies that add jobs. Obama’s economic team proposed a similar incentive during negotiations over the stimulus package enacted in February but the idea was abandoned amid questions over its implementation.
A proposal by Sen. Arlen Specter, D-Pa., would provide a $4,000 tax credit, to be paid out over two years, for each new employee. His office could not provide a cost estimate.
Pelosi said lawmakers need to hear from economists before settling on a package to create jobs. “What is it that we can afford? What works the fastest?” Pelosi said.