Now that President Obama has signed the $787 billion stimulus bill, I've finally gotten around to reading a bit more detail on it.  As I suspected (and wrote last week), there are some parts of the bill that I think lawmakers got right--in other words, they will be effective at stimulating economic growth and cushioning the workers who are bearing the brunt of the downturn right now.  And there are other pieces of the legislation that I suspect will not provide much in the way of economic stimulus.

The parts of the legislation that I predict will be most effective are:

1.  Extension of unemployment benefits and subsidizing of COBRA co-pays for people who've lost their jobs since September 2008.

2.  Various infrastructure projects aimed at shoring up our roadways, putting us on the path to new and more energy efficient approaches to how we live our lives and consume our resources.

3.  I am cautiously optimistic that there will also be a good result from Obama's $50 billion plan to turn the tide on foreclosures.  It will depend on banks actually cooperating with the government on redrawing loans and accepting some portion of the losses they helped build up with the real estate bubble...but I am hopeful that it will cushion the downward spiral of real estate values, allowing us to bottom out sooner rather than later.

The parts of the legislation I'm most skeptical about are:

1.  Business tax cuts.  I don't see a lot of businesses out there who will either invest in new equipment or hire new employees based on (even more) tax cuts than they got under Bush.  I think they will more likely bank the excess and wait for the American (or some other country's) consumer to ramp up purchasing again.

2.  State budget help:  The shortfall faced by states, especially California, is much bigger than the help provided by the bill.  In those cases where the help is for infrastructure, I think employment will either expand or not shrink as much as it otherwise would.  Where it's allocated for programs, things can get a little less transparent and more hinky at the State government level.  Also, States may increase taxes to cover their shortfalls, so to the extent that the Feds provide tax relief, taxpayers might see more of a tax burden at the State level.

3.  Non-stimulus package related, but I'd like to see more on what the Obama administration has in mind for the rest of the TARP funds.  How will purchasing all the "bad debt" help us?  It may stimulate banks to lend more if the troubled assets are off their books but bankers are leary of lending right now...even to good credit risks.  I think there would need to be lending requirements tied to the funds.

That being said, our own little State, California, is in a mell of a hess right now.  The Governor is sending out pink slips after we failed (again) to pass our budget.  By one vote.

We couldn't get 3 Republicans to cross over and vote for a combination of tax increases and program cuts.  And in a State where you need a 2/3 vote for tax increases, the minority has the majority by the short hairs.  So afraid are our Republican bretheren of being associated with tax increases, they won't compromise at all.

Now, I don't know Anthony Adams, Republican Assemblyman from Hesperia.  He's one of the lawmakers who supports the compromise bill and for that, I salute him. 

But he also made a statement that's troubling me, that I think summarizes our issue at the national and the state level right now.  Quoth Mr. Adams:

"My job is to get the best possible deal for Republicans."

No, Mr. Adams.  Your job is to get the best possible deal for the people of California.

 

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