The details are still sketchy, but here’s what we know about what was cut from the House version of the stimulus bill.
In addition to the large cut [$40 billion] in state aid, the Senate agreement would cut nearly $20 billion proposed for school construction; $8 billion to refurbish federal buildings and make them more energy efficient; $1 billion for the early childhood program Head Start; and $2 billion from a plan to expand broadband data networks in rural and underserved areas.
Plus…
Even Mr. Obama’s signature tax cut for middle-class Americans was scaled back as part of the deal. Under the new plan, tax credits of up to $500 for individuals and $1,000 for couples would begin to phase out at lower income levels than first proposed, saving the government $2 billion.
Yet, some spending was added, including about $30 billion in consumer tax cuts to encourage the purchase of homes and cars, and $6.5 billion to the National Institute of Health. As a result, the overall cost of the Senate package appears to be roughly the same as the House version (approximately $820 billion).
I don’t think there is any question that the House version is better and would be more effective as a stimulus. Once the Senate bill passes and goes to conference, the House negotiators will look to restore as much as they can, but they’ll have to be careful not to blow up the deal with Specter, Snowe, and Collins. We should expect the final product to be a slight improvement over the Senate version.
The compromise legislation is unpopular on both the right and the left. That’s the nature of a compromise. The important question is whether or not the stimulus bill will stop the economic free-fall we’re experiencing. If it does, then this bill did what it was created to do. If it doesn’t, we’re in deep trouble because there is a limit to how much borrowing this country can do if the economy is not responding.
