Economic Recovery Measures
A month ago, we called on those who oppose tax increases to take the spending challenge, showing us how to stabilize the debt only through spending cuts, and those who oppose spending cuts to show us how to stabilize the debt through tax increases. We think it will be quite difficult to get our fiscal house in order without addressing both sides of the budget.
A year ago today, Congress and the President enacted the American Recovery and Reinvestment Act, providing $787 billion in fiscal stimulus through a combination of spending increases and tax breaks. Recent estimates from the CBO now put the total cost of the bill at $862 billion, accounting for higher than expected costs for unemployment benefits, food stamps, and build America bonds.
Snow Job – Just hours after Senators Max Baucus (D-MT) and Charles Grassley (R-IA) announced they had reached a deal on a jobs bill, Senate Majority Leader Harry Reid (D-NV) plowed it under, saying it was too bloated with provisions not related to creating jobs. The Senate will consider the scaled-down version Reid crafted on February 22 when it returns from its week-long President’s Day recess.
Here are the highlights from this weekend’s editorials on fiscal and budget policy:
The New York Times criticized Republican healthcare reform proposals as not doing enough to fix the current system or to contain costs. Proposals such as health savings accounts, high-risk pools, and allowing insurance to be purchased in any state, they argued, would either not drive down costs enough or would actually push up premiums for certain groups.
The Senate is likely to turn to a tightly focused jobs bill when it returns from the President's Day break next week. The bill, a much-scaled down version of legislation written by Senate Finance Committee Chairman Max Baucus (D-Mont) and his ranking Republican, Charles Grassley of Iowa, contains provisions that the Congressional Budget Office said earlier this year would indeed help stimulate the economy.
In the budget released last week, the President outlined his vision for additional economic stimulus. Included in his proposal was $76 billion over 11 years (including $29 billion in 2010) to extend existing stimulus measures on the tax side, $90 billion ($45 billion in 2010) to extend spending stimulus measures, and another $100 billion ($24 billion in 2010) to allow for new, yet-to-be-specified stimulus measures.
On Friday evening, the FDIC reported that it has taken over an additional bank (First American State Bank of Minnesota) for a cost to the FDIC of about $3 million. This brings the total number of failed banks since the beginning of 2008 to 182. Total deposits of all failed banks now equal over $8.7 billion for 2010 and $380 billion since the beginning of 2008, all at an estimated cost to the FDIC of about $61.4 billion.
Earlier this week, four Fed lending facilities came to a close (see Fed release here), as previously announced, in light of improved conditions in financial markets. Among the expiring programs included the Commercial Paper Funding Facility, Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, Primary Dealer Credit Facility, and the Term Securities Lending Facility (links will direct you to a full description of each program at Stimulus.org).