House to Introduce Second Stimulus Bill Next Month

Wednesday, October 29, 2008 1:52 PM

WASHINGTON -- U.S. state leaders, trade groups and economists descended on the House of Representatives on Wednesday to help work out a second economic stimulus bill that one influential Congressional member said would be introduced on November 17.

Representative Jim Oberstar, the Minnesota Democrat who chairs the House Transportation and Infrastructure Committee, told a hearing on jump-starting the stalled economy that Congressional staff would be meeting throughout the month and a stimulus bill would be introduced when Congress reconvenes next month.

The House passed a sweeping $61 billion stimulus bill last month, but the package was blocked in the Senate and Speaker of the U.S. House of Representatives Nancy Pelosi, a California Democrat, said the legislators would try again.

"We will not have any package at all unless the President agrees," Rep. Charles Rangel, the New York Democrat who heads the Ways and Means Committee that controls the federal purse strings, which also held a hearing on Monday.

President George W. Bush has signaled he may lower his resistance to a bill that would follow up on a stimulus bill passed this winter that gave businesses capital tax breaks and sent $600 checks to most Americans.

On Monday, legislators heard a wide range of suggestions to help the economy, from extending unemployment benefits to renovating buildings owned by the Smithsonian Institution. Much of the pressure was to aid states and cities, with governors and mayors asking the federal government to remember their needs.

"Unlike the federal government, local governments cannot carry a deficit from one year to the next...As a result, many cities are taking drastic steps to balance their budgets," Trenton Mayor Douglas Palmer told the Ways and Means Committee.

New Jersey Governor John Corzine asked Congress to pass a stimulus bill that would total $250 to $300 billion while testifying before the Transportation and Infrastructure Committee, saying states may have to slash their budgets more than $100 billion in the next fiscal year without federal assistance. Infrastructure investments, such as road and bridge repairs, would especially aid states suffering from increasing unemployment, he said.

"New Jersey alone was to have $1.2 billion in additional construction projects ready to go within the next 90-120 days. The reality is we should be making these investments even if we weren't in a recession," he said.

Corzine, a former co-chairman of Goldman Sachs and U.S. Senator, said that his eastern state would bump up spending on infrastructure even without Congressional help.

"This is not about pork barrel funding. We're going to do this whether there is a stimulus package or not, we are so convinced that we can lean against the winds of unemployment in the real economy," he said, noting that the layoffs in investment banks were hitting his state hard.

Nearly half of last month's stalled stimulus bill targeted repairing highways and bridges, improving public transit, and investing in the train company Amtrak, airports, the clean water fund and the Army Corps of Engineers.

David Paterson, governor of New Jersey's neighbor New York, however, told the Ways and Means Committee that the first priority of a stimulus bill should be giving direct and immediate fiscal relief to states through emergency block grants and reimbursements for their portions of Medicaid, the joint healthcare program administered by the federal government and the states.

While Paterson said infrastructure spending was also key, he added the caveat that "state budget conditions have deteriorated to the point where any federal dollars received for infrastructure projects must be free from state matching fund requirements."

In contrast, South Carolina Governor Mark Sanford begged the Ways and Means Committee not to pass a stimulus bill at all, saying the added debt would cause long-term damage to U.S. economy.

"If you go ahead with this, the question has to be asked who bails out the bailouters," he said.

Sanford said he found irony in addressing a problem brought about by excessive borrowing — the financial meltdown spurred by the credit crisis and housing downturn —with more borrowing.

Rep. John Mica of Florida, who is the highest ranking Republican on the infrastructure committee, said a stimulus bill would not be full of "pork" — the funds members of Congress often set aside for pet projects in their districts —and it should be implemented speedily.

"We should focus on eliminating red tape to move forward with projects critical to improving our deteriorating infrastructure and providing out-of-work Americans with jobs," he said.

When the first stimulus bill was considered, measures to boost infrastructure spending were dropped because many feared that distributing the money and beginning construction projects would take too long to create any economic benefits.

"I'm tired of hearing from the pointy-headed economists who say, 'Oh, these infrastructure projects take too long,'" Rep. Peter DeFazio, an Oregon Democrat, said at the infrastructure hearing. "There are some economists now... who say, 'Well, actually, this recession is probably going to be so long and so deep that argument doesn't hold sway."


One way the federal government could help get money flowing through local and state economies would be to create a guarantee for municipal debt, said Timothy Firestine, Chief Administrative Officer of Montgomery County, Maryland.

"There's nobody willing to provide guarantees for short-term liquidity. That's the best place for Congress to help," he told the Ways and Means Committee, noting that some municipalities cannot make their payrolls because they cannot access short-term debt

The guarantee would be similar to that offered for commercial paper under the recently passed economic stabilization act, he said, echoing suggestions made by many in the municipal bond market

"Congress and the Treasury could also act to lift burdensome tax code requirements on corporations and property and casualty insurers that limit the amount of tax-exempt bonds that they can purchase," he said. ... 45416.html