A Stimulus Plan That Would Actually Work

The Scatigna Stimulus Act of 2009

By Lou Scatigna

The phone book size "stimulus bill" being contentiously debated in Congress is nothing more than a pork laden, non-job creating, gift to Democratic benefactors.

During the usual appropriations process, spending offsets or revenue increases are required for new spending programs. These restrictions have put limits on congressional spending and makes it more difficult to fund pet projects.

Since the bill being crafted now is an emergency appropriation, there is no restriction to offset spending with cuts elsewhere or increased revenue. This has resulted in the insertion of every spending measure that Democrats have been wanting to enact for years. To be fair, if the shoe were on the other foot and Republicans had total control of Congress they would have enacted all kinds of tax cuts and their pet projects, that is the way of Washington politics.

Is is disturbing that Congressional Democrats and the Obama Administration are pushing for passage of an almost trillion dollar spending bill with the support of what looks like only three Republicans. The bipartisan Congressional Budget Office has said that over time the bill as it is currently crafted will do more harm than good. The fact that the President is saying that the economy will experience a "catastrophe" if this bill is not approved this week should only add to the public's suspicion. To be sure, the devil is in the details and advocates want this bill passed before the public can learn what they are.

If Congress and the Administration really want to stabilize the economy and create jobs, they must not waste money on things that will either have the opposite effect or no effect at all.

It is time for Congress tear up the current bill and enact the "Scatigna Stimulus Act of 2009". My bill is quite simple and would be effective in creating jobs, improving infrastructure and strengthening the social safety net. It would even have a small environmental benefit as it would only be about 50 pages instead of the current 647 page document.

There would only be 4 areas where money would be spent. I would divide the $800 billion equally amongst all four.

1. Stabilization of the Housing Market

The decline in home values is the major cause of the financial crisis and until housing prices stabilize the economy will continue to contract. A combination of buyer incentives (tax credits and low interest fixed rate, government guaranteed mortages), loan modifications for existing mortgages (coversion to 4%, 40 yr fixed with principle reduced to current market value ) and the halt to all foreclosures would work quickly. These actions coupled with the Treasury's proper use of the remaining $350 billion of TARP funds would help stabilize the banking system.

2. Infrastructure Projects

Thousands of roads and bridges are in desperate need of repair or replacement. The electrical grid must be modernized and expanded. By allocating a quarter of the spending bill to these infrastructure projects not only will we be able to provide a large number of jobs, we would actually have something of long-term benefit to show for it.

3. Tax Cuts For Individuals and Buisnesses

Tax cuts have historically spurred economic growth by giving companies incentive to expand and hire. A cut in corporate tax rates, tax credits for hiring and capital improvements would have an immediate stimulative effect. Individuals who actually work and pay taxes would have their tax rate reduced by at least one third. The extra take-home income would find it's way into the retail economy and lend support to the failing commercial real estate market.

4. Social Safety Net

Many families are hurting as a result of the current economic crisis. It is the government's responsibilty to provide assistance during these difficult times. A quarter of the spending bill should be used to extend unemployment benefits, increase food stamps, assist states with growing welfare obligations and provide health care assistance to those without insurance.

I'm sure the "Scatigna Stimulus Act of 2009" would actually achieve the goals of economic stabilization, job creation and social support. My plan would not be a reward for lobbyists or payback to campaign contributors, that's why it would never be enacted.