One of the more bizarre criticisms of the Obama administration in its early months was that it made a mistake in allowing Congress to write the stimulus package. The Economist, in all its intellectual glory, exemplified this stupid claim, writing in a late March editorial that "[h]is [President Obama's] stimulus package, though huge, was subcontracted to Congress."
Well, duh. This may be news to some, but Congress writes all of the f*cking bills that get passed into law. It has to. No one except a member of Congress has the ability to introduce, or vote on, legislation that passes through Congress. While people close to the process, including staff, lobbyists, and the executive branch, can suggest language, ultimately the final decision always rests with members of Congress.
And so it will be the same with the new jobs bill. President Obama gave a speech today offering a bunch of suggestions, but in the end he will not write the legislation. Congress will. And here is how that process breaks down, part by part:
- $100 billion for unemployment and COBRA extensions. The largest portion of the jobs bill will be a $100 billion extension of unemployment and COBRA benefits. These ideas were originally introduced as stand-alone legislation (for example, Joe Sestak the House and Roland Burris in the Senate introduced the COBRA bills), but they are now being folded into jobs bill. This will be about one-third of the entire bill, and it will not be written by the administration at all.
- $75 billion for aid to states. The jobs creation package will also contain a large amount of aide to state and local governments. The amount could be as high as $75 billion (for an overall gap of about $190 billion in 2010), and is designed to help state and local governments prevent laying off firefighters, teachers, police, etc. While the Obama administration does not anticipate it being part of the bill, and while President Obama did not mention it in his speech today, it is going to happen. Whether it ends up as part of the bill itself, or is passed as part of separate legislation, is actually up to Congress. Further, how the money is spent will ultimately be determined by state and local governments, rather than by anyone in D.C.
- $50-$69 billion for infrastructure. In his speech today, President Obama suggested $50 billion in spending on infrastructure such as "cash for caulkers," which would be a home weatherization program modeled after "cash for clunkers." However, the House is proposing $69 billion in such infrastructure spending. Since appropriation bills like these have to come from the House, it is actually up to them to write the legislation. Negotiations with the Senate will probably knock down the amount to $50 or $60 billion, as the Conservadems once again work to be moderate for the sake of moderate, but this really isn't up to the Obama administration at all. Further, given that Obama administration's demonstrated willingness to let Congress work out specific details of legislation, don't even expect them to try and interject into the negotiations over the precise amount of infrastructure spending that is finally appropriated.
- $50 billion for small business lending from TARP. In addition to the small business lending programs the President outlined in his speech today, a much larger, $50 billion small business lending program, using TARP money, is still being negotiated by Senator Mark Warner and the Treasury Department. Last week, over email, a spokesman for Mark Warner sounded positive about the progress of these negotiations, and a senior Obama administration official confirms to me that these negotiations continue.
This will not go directly through Congress, but is still meant as part of the overall jobs creation package. It actually will be one of the few aspects of the overall package that will be written directly in conjunction with the Obama administration. This is also why it will not be part of the bill--which Congress has to write--but instead part of the overall package.
- At least $47 billion in small business tax credits and SBA lending. The remaining aspects of the bill primarily focus on small business tax credits and lending. This includes $27 billion for a new hiring tax credit proposed by Russ Feingold, and $20 billion in new loans from the Small Business Administration. Even though they were both mentioned by the President in his speech, the ideas cam from Congress and the details will be worked out by Congress.
The President's speech also mentioned cut in capital gains taxes for small businesses, an extension of the small business expenses program created by the first stimulus, and an elimination of lending fees for businesses using the SBA. I have not yet been able to determine the size of these programs.
The overall package could top out at $350 billion, with $300 billion of the specific appropriations being written by Congress. That process will start in the House, as all appropriation processes must. It will end in the Senate, with Conservadems whittling down the size of all or some of the programs just for the sake of it, as apparently must be done at all times as well.
A truly comprehensive bill would tack on another $130-$150 billion in infrastructure spending, and another $100 billion in aid to states over two years. Some will argue that Democrats are making a mistake not starting with bigger demands like that, because the negotiation process will inevitably whittle down the size of all proposals. Others will argue that proposing an overall package in the $600 billion range would cause the entire process to seize up, and result in no bill whatsoever. Hypotheticals and counterfactuals such as these are difficult to prove one way or the other, but count me in the camp that we should have started at least somewhere higher than the $350 billion being proposed for the package, even if $600 billion might not have been possible.
Update--more infrastructure spending: The House will start with at least $75 billion in infrastructure spending, more than the $69 billion they previously suggested, and much more than the $50 billion President Obama suggested today.
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