Obama Pushes Recovery and Reinvestment Package, Details Still Lacking
Issuing a stark warning that the nation’s current economic downturn could get "dramatically worse" without swift government action, President-elect Barack Obama today outlined his vision of a broad economic recovery package aimed at saving or creating three million American jobs over the next few years. He did not announce the details of the package or even the overall size. Those details are expected to emerge in the next several days after further discussions between the Obama team and congressional leaders.
Obama’s overall plan aims to "retrofit America for a global economy." Pieces of the plan include:
- Investment in infrastructure
- Doubling renewable energy production
- Moving to all-electronic health records within five years
- Laying broadband lines across the country and developing a smart grid
- Providing 95 percent of taxpayers with a $1,000 tax cut
- Continuation of unemployment benefits
- New technology and computers for schools and training for teachers
Named the American Recovery and Reinvestment Plan (ARRP), Obama’s proposal carries the duel objective of jolting short-term consumer and business activity, while also investing in long-term domestic initiatives such as new infrastructure, energy, education and health care. Both the President-elect and congressional leadership believe in acting quickly and plan to complete the stimulus package by mid-February. Per Obama, the ARRP will include no earmarks or pet projects.
While the President-elect directly acknowledged the skepticism surrounding the bill’s price tag and its advisability during a period of soaring federal budget deficits, he said inaction would "lead to an even greater deficit of jobs, incomes, and confidence in our economy." Furthermore, Obama tacitly criticized the Bush administration’s handling of the $700 billion Troubled Asset Relief Program (TARP), emphasizing that the ARRP will stress both transparency and accountability by avoiding government spending that will "just throw money at our problems."
The President-elect has already announced that the tax cut and incentive portion of the package will have a budget impact of $300 billion. Today, the Senate Finance Committee is convening a closed-door session to discuss the tax provision of ARRP, which could be marked up as early as next week. Finance Chairman Max Baucus (D-MT) has expressed his preference of drafting a bill capable of garnering a strong bipartisan consensus of perhaps 80 votes or more, providing an indication that significant debate will be necessary to appease a variety of competing proposals, especially those pertaining to tax incentives for renewable energy and business. However, in the midst of warnings from economists that any congressional action must come sooner rather than later, pressure is mounting on lawmakers to avoid stalled negotiations that can often occur during high-profile debates, as evidenced by October’s TARP debate.
House Speaker Nancy Pelosi (D-CA) has outlined a broad timeline for action within her chamber regarding the economic stimulus package. It is expected that both the House Appropriations and Ways and Means committees will markup the legislation during the week of January 19. According to a spokesman, the Speaker would like the legislation to be considered on the House floor by the end of January, conference with the Senate, and have the bill cleared for the president’s signature by mid-February. While Republicans have expressed concern regarding the cost of the legislation, it appears that there is a consensus among the leadership of both parties that a package must be passed relatively quickly. Senate Minority Leader Mitch McConnell (R-KY) stated that he believed the bill could be completed within a month’s time.
Blank Rome will continue to monitor all ongoing developments regarding the ARRP.
Notice: The purpose of this newsletter is to identify select developments that may be of interest to readers. The information contained herein is abridged and summarized from various sources, the accuracy and completeness of which cannot be assured. This alert should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.