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STIMULUS: The Compromise Between House and Senate

Rick Cohen
February 12, 2009

The big change of note is the successful lobbying of the nonprofit housing development sector–Community Development Corporations and others–to get $2 billion restored for the Neighborhood Stabilization Program that cities and nonprofits are using to acquire and rehabilitate vacant, foreclosed properties that have been the casualties of the subprime mortgage foreclosure crisis.  That funding had been pulled out of the Senate bill, so it is a mark of lobbying success that it made its way–surprisingly!–into the conference bill.  The conference bill looks like it will also have $1.5 billion for the Emergency Shelter Grant program, for short term rental aid for families.

$5 billion for weatherization repairs for moderate-income homes:  This is an activity that community-based nonprofit developers should be able to handle with skill and professionalism.  Community Development Corporations, community action agencies, and others have a job ahead of them, but at least there’s finally capital to do it with.

Early Head Start gets an infusion of $1.1 billion and Head Start $1 billion from the compromise bill.  According to Speaker Pelosi’s release, this opens Head Start to another 110,000 infants and children.  The bill also includes $2 billion for the Child Care Development Block Grant, to provide child care slots for 300,000 children with low-income working parents.

The Pelosi release indicates a 13 percent increase in Food Stamp benefits plus $100 million for the Emergency Food and Shelter program, $100 million (through states by formula) for elderly nutrition programs such as Meals on Wheels, and $150 million for the Emergency Food Assistance Program for food banks.

Interesting that the community service element of the economic stimulus is with senior citizens; the program that supports community service work by older Americans gets $120 million in the compromise bill, opening slots for an additional 24,000 senior citizen community service participants.

There’s obviously a lot more to report here, and we will do so in the next days and weeks.  But a few points seem to be obvious:

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1.  This compromise bill is a reduction in total tax and spending from both the House and Senate versions.  Yesterday (February 11), a Democratic senate aide put the total cost of the legislation at $789.5 billion, down from the $819-838 billion cost of the House and Senate bills.

2.  For nonprofits concerned about state government finances, the compromise bill is a big time retreat from the House bill, allocating $53.6 billion compared to the House bill’s roughly $95 billion.  The compromise reportedly puts in $40.6 billion for local school districts (for preventing layoffs, school modernization, and more), $5 billion for states as “bonus” grants for meeting specified education performance measures, and $8 billion for other high priority state budget needs such as public safety and other services (including, notably, education).   Apparently, the compromise Republicans wanted these funds to be spent at the discretion of the governors, while the Democrats wanted to target the funds to education and particularly to school construction.  Based on the numbers, the result is that the fiscal pain of the states will continue.

3.  The bill includes the very stimulus-questionable “fix” in the Alternative Minimum Tax (AMT), costing maybe something like $70 billion.  As a stimulus item, it’s pretty dubious.  And regarding who benefits from the AMT change, it’s not really poor people.  This is a provision that ratchets up the economic status of the beneficiaries of the stimulus, perhaps in response to their vocal concerns that the stimulus wasn’t benefiting more affluent families–and more affluent voters.

4.  Given the housing/mortgage origins of much of the current economic crisis, it was surprising to see the conference committee drop the $15,000 tax credit for the purchase of new homes.   Instead, the compromise continues the House version of a $7,500 tax credit for first-time homebuyers, a much less costly provision ($2-3 billion compared to the $35 billion cost of the Senate’s larger and more expansive credit).  There are certainly socio-economic equity issues to be addressed in using federal moneys to subsidize homeowners while continuing to provide tepid support at best to renters.  But stimulating the housing market would, at this point in the economic freefall, seem to be an important component of a stimulus, even if the economic profile of the beneficiaries capable of buying homes is not at the bottom of the income/wealth distribution.

More coming in the next post on how rural fared, how the Corporation for National and Community Service fared, and what happened with the Senate’s plan for $100 billion for YouthBuild.

About the author
Rick Cohen

Rick joined NPQ in 2006, after almost eight years as the executive director of the National Committee for Responsive Philanthropy (NCRP). Before that he played various roles as a community worker and advisor to others doing community work. He also worked in government. Cohen pursued investigative and analytical articles, advocated for increased philanthropic giving and access for disenfranchised constituencies, and promoted increased philanthropic and nonprofit accountability.

More about: OpinionPolicyThe Cohen Report

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