Summary – “Stimulus II” Appropriations Bill

                            Summary – “Stimulus II” Appropriations Bill

Democrat leaders will today bring to the floor a massive “Stimulus II” bill which will spend more than $154 billion in taxpayer dollars. The legislation is being considered under a completely closed process largely out of the view of the public – it was unveiled only late last night, there were no hearings or markups, it was not subject to non-partisan budget analysis, and it will not be allowed to be amended on the floor.

It is clear that the Democrat majority has not learned from the last failed stimulus – government spending will not get us out of our economic troubles. More government spending will only exacerbate our financial troubles and will bring little to no relief to those Americans suffering from job-loss or financial hardship.

The following is summary of the major portions of the Democrats’ “Stimulus II” bill:

Discretionary Spending:

Bill includes $75 billion in additional spending on discretionary programs, despite the fact Congress just last week passed a massive Omnibus providing a 12% increase for non-defense, non-veterans discretionary programs for Fiscal Year 2010.

Some of the major discretionary items in the bill include:

• $23 billion to bailout state and local governments through FY 2011. This is on top of the $53 billion the Democrats approved in the first Stimulus to bail them out in FY 2009 and FY 2010. By extending these bailouts for yet another year, it appears that even the Democrats who championed “stimulus” measures as economic solutions don’t seem to have a lot of faith in their own policies.

• $27.5 billion in taxpayer dollars from the general fund to pay for highway projects. This is on top of the $42 billion for highways – or an 11% increase – included in the Omnibus bill passed last week. This provision is almost identical to the highway provision in the first “stimulus” bill.

• $9.2 billion for transit programs, including $800 million for Amtrak to rehab and buy new trains. Rail programs including Amtrak already received a 147% increase in funding in the FY 2010 Omnibus bill.

• $2.3 billion for various programs funded in the Interior bill, including EPA water and wastewater grants and various other programs. These programs got $8.4 billion in the first “stimulus,” of which only 4% has been spent. And, the regular FY 2010 Interior bill approved by Congress this fall – which also contained funding for these programs - contained a 17% increase over last year.

• $4.1 billion for a brand new program to fund school construction.

• $2 billion to “repay” money taken earlier in the year from an alternative energy loan guarantee program to pay for “Cash for Clunkers.” This loan program has spent less than one-tenth of one percent of the $4 billion provided in the first “stimulus” bill.

• $1.1 billion for an Affordable Housing Trust Fund to build and then subsidize operations for new low income housing projects. This program has never before been funded, and once started will become a permanent and expensive expansion of the federal housing program. Previous Democrat attempts to dramatically expand the Federal government’s role in public housing were supposed to be paid for by profits from Fannie Mae and Freddie Mac. Now that Fannie and Freddie have gone bankrupt, the Democrats are trying to stick the taxpayer with the cost to pay for this new permanent program that could ultimately cost the taxpayer $100 billion.

• $1 billion for grants to Public Housing Authorities for public housing repair and rehabilitation. The first “stimulus” provided $4 billion - of which 5% has actually been spent. CBO has said that these first stimulus funds merely supplanted already generous funding, meaning that no additional activity actually occurred and no new jobs have been created. In addition, yet another $3 billion in funding for this program was approved in the Omnibus last week.

• $750 million for job training for “high growth” industries, which the Democrats intend to go primarily to “green jobs” and jobs in the health care industry. Congress provided $750 million for this programs in the first “stimulus,” and to date, none of the funds have been expended.

• $500 million in immediate funding for Summer Youth Jobs… in December. Congress provided $1.2 billion on youth training in the first “stimulus,” and only about 60% of the original funds have been expended.

• $1 billion for COPS hiring grants for states and localities that are facing shortfalls to hire new police officers. However, these states and localities will have to find ways to continue paying these new employees in the future, even after the program ends, which could lead to even more lay-offs and budget shortfalls. The first “stimulus” provided $1 billion for this program, and only $1 million has been spent – which is estimated to be just enough to hire one cop.

• $500 million for Firefighter Assistance Grants, which subsidize municipalities for firefighter related costs. These funds are on top of $210 million provided in the first “stimulus” bill of which 0% has been spent. Furthermore, a total of $810 million in firefighter programs was passed by Congress just two months ago in the FY 2010 Homeland Security Appropriations bill.

Mandatory Spending and Other Items:

There are $79 billion in mandatory program or tax changes, including:

• An extension and expansion of unemployment benefits at a cost of $41 billion.

• An extension and expansion of subsidies for individuals on COBRA at a cost of $12.3 billion.

• An extension of higher federal matches for Medicaid (FMAP) at a cost of $23.5 billion.

• An elimination of the earned income requirement for the child care tax credit in 2010 to allow parents who don’t work to receive a fully refundable tax credit of $1,000 per child at a cost of $2.3 billion. Democrats indicate that this will make 16 million more people eligible for this program.

• Provisions changing poverty guidelines and the treatment of income tax credits for welfare program eligibility for individuals that don’t pay taxes, at a cost of $305 million. These provisions are intended to set the stage for future Democrat actions to dramatically expand eligibility for these programs (e.g. Food Stamps and Medicaid).

Highway Extension:

• The bill transfers $19.5 billion from the General Fund to once again prop up the failing Highway Trust Fund in the absence of real reform and a long-term highway program. Every dollar of this transfer will add to the deficit.

Phony Gimmicks:

• The bill represents over $154 billion in deficit spending. While the Democrats claim to have “offset” $75 billion with unused or recycled funds from the TARP program, this is merely a gimmick to spend TARP funds that otherwise are being used to pay down the deficit. For the remaining $79 billion, Democrats would once again simply waive their much touted “pay-go” rules to spend tax-dollars on entitlement programs expansions. Therefore, nothing in this bill is “paid for,” the spending in the legislation will still come out of the treasury, and taxpayers still will be footing the bill.