- The Washington Times - Thursday, January 15, 2009

WASHINGTON (AP) — Working closely with President-elect Barack Obama, House Democrats on Thursday called for $825 billion in federal spending and tax cuts to revive the economy, with strong emphasis on energy, education, health care and jobs-producing highway construction.

The legislation calls for federal spending of roughly $550 billion and tax cuts of $275 billion over the next two years — totals certain to change as the measure works its way through Congress.

The measure calls for $90 billion to help the states meet the rising cost of providing health care for the poor in the recession, and another $39 billion to subsidize coverage by out-of-work wage-earners who cannot afford the cost of their employer-covered health care.

See related story:Hill support erodes for bailout funding

More than $100 billion is ticketed for education, including money for school districts to shield them from the effects of state cutbacks in services.

Democratic leaders in Congress have pledged to have legislation ready for Obama to sign by mid-February.

Democrats planned to unveil the proposal later in the day. The Associated Press obtained a copy in advance of the announcement.

Read highlights of the plan:

Obama’s top aides have worked closely in recent days with Democrats in Congress to shape legislation that generally adheres to the president-elect’s wishes.

At the same time, lawmakers departed dramatically in one area, jettisoning the incoming administration’s call to give a $3,000 tax credit for each new job created by private companies.

Another key priority of the new administration was preserved, though. The summary calls for a tax credit of $500 per worker and $1,000 per working couple.

The measure does not include money to help middle-class taxpayers ensnared in the so-called Alternative Minimum Tax, which was originally designed to prevent the extremely wealthy from avoiding payment of taxes. Several officials said the Senate was likely to include that provision in its version of the bill, a step that could push the overall total close to $900 billion.

The legislation is one of two key elements in Obama’s emerging plan to revitalize the economy. He also has lobbied lawmakers not to stand in the way of the use of another $350 billion in financial bailout money.

The Senate was expected to vote on the issue later in the day, and the outcome was so uncertain that a tie vote seemed possible. If so, the money would be released.

With unemployment rising, and applications for various forms of federal aid keeping pace, the legislation calls for increased spending on food stamps, unemployment insurance and job training. It also proposes an increase in PELL grants for college students of $500.

House leaders called for $30 billion for highway construction and $10 billion for mass transit and rail.

The summary claimed “unprecedented accountability” and said the bill would include no earmarks, the pet projects that lawmakers are fond of.

In addition, Democrats said all announcements of contract and grant competition would be posted on a Web Site to be created by the new administration.

Funds for energy-related programs were sprinkled throughout the legislation, reflecting a priority not only of Obama, but also House Speaker Nancy Pelosi, D-Calif., and numerous lawmakers in both houses of Congress.

Included is $32 billion to upgrade the nation’s electrical distribution system, more than $20 billion in tax cuts to promote the development of alternatives to oil fuels, and billions more to make public housing, federal buildings and modest-income homes more energy efficient.

At $825 billion, the legislation would be one of the largest bills ever to move through Congress, and by traditional standards, lawmakers were moving with unusual speed.

House committees are working on a schedule that calls for votes next week on parts of the bill, which would then be advanced to the floor for a vote during the last week of January.

Across the Capitol, a companion measure is expected to move along roughly the same timeline in the Senate, and congressional leaders have expressed confidence they would be able to agree on a final version by the time of a scheduled vacation coinciding with Presidents’ Day.

Other items in the measure include funds for state and local law enforcement funds, extending broadband service to rural and other underserved areas, and money to computerize health records, a key priority of the incoming president.

Businesses would be able to reduce their taxes through a provision that expands their ability to write off current losses again past profits, and by accelerating the depreciation of new plants and equipment.

First-time homeowners also would get a break. The bill eliminates the requirement for them to repay a new $7,500 tax credit created in a housing measure that passed last summer.

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