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Lee denounces "bloated" stimulus package; local Dems respond

By Philip Anselmo

Congressman Chris Lee spoke yesterday against the $819 billion economic stimulus package that passed the House yesterday by a vote of 244-188—not a single Republican voted in favor of the measure, along with eleven Democrats who also disapproved. His office sent us this video of that speech.

From the press release issued by Lee's office:

Congressman Lee supports an economic stimulus plan that works swiftly and effectively while spending Western New Yorkers’ hard-earned tax dollars wisely. That’s why he voted this evening for an alternative measure that includes immediate tax relief for working families, help for America’s small businesses, assistance for the unemployed, stabilization of home values, and no tax increases to pay for spending. Congressman Lee helped craft this alternative measure as part of a working group of Republican lawmakers appointed by House leaders to present ideas to President Obama for inclusion in a bipartisan stimulus plan.

Since being sworn-in to office, Congressman Lee has been gathering information on the stimulus plan, evaluating dozens of proposals, and carefully considering the best ideas for creating jobs in Western New York. He has met with and solicited input from community leaders, economic experts, and constituents. He will discuss his views on the stimulus plan in a live telephone town hall meeting to be held this evening with residents in all seven counties of the 26th district.

Lee calls for more to be done to spur job growth and protect the unemployed. He calls for more tax cuts and less spending. And he claims that not enough is being done to provide tax relief for the middle class. These sound like great points: more jobs, better protection, more relief, fewer burdens—all good stuff.

Yet, confusingly, House Speaker Nancy Pelosi claims that the current bill does all of those things. Her Web site lists "tax cuts for American families" that would total $185 billion over the next 10 years. Such cuts would include immediate relief "to 95 percent of American workers through a refundable tax credit of up to $500 per worker ($1,000 per couple filing jointly).... These tax cuts would be distributed to millions of families by reducing tax withholding from workers’ paychecks."

Furthermore, she cites "business tax incentives to create jobs and spur investment" that would total $20 billion over the next ten years. "This would allow businesses to write off 90% of losses incurred in 2008 and 2009 against taxes assessed over the previous five years." What's more, "this would not be available to companies that have benefited under the TARP."

Of course, there is plenty else mentioned in Pelosi's breakdown that doesn't sound so rosy. If the situation is as dire as we're being told, should we be fronting a $6 billion broadband expansion? What about $650 million for television upgrades? Lee's office sent us this list of other "egregious spending" included in the bill:

• $1 billion for the follow-up to the 2010 Census.
• $600 million to buy new cars for government workers.
• $462 million for equipment, construction, and renovation of facilities at the Centers for Disease Control.
• $335 million for the prevention of sexually transmitted diseases.
• $50 million in funding for the National Endowment of the Arts.
• $44 million for repairs to U.S. Department of Agriculture headquarters.

I don't know if all of these count as instances of egregious spending—$50 million for the NEA is nothing compared with $650 to keep people watching television. Furthermore, there's so much money, ludicrous amounts of money, that this bill seeks to release in the name of modernization. Sincerely, at one point, in Pelosi's breakdown, a use given for some of the funds is literally: to "create new modernization ... programs." What!?

For the scrappy among you, you can visit the topics page on the economic stimulus put together by the New York Times. On it, there is a link to the full text of the bill.

Of course, area Democrats were quick to respond to Lee's no vote. They issued the following statement yesterday evening:

Democrats in the GLOW Counties (Genesee, Livingston, Orlean, and Wyoming) reacted this evening to Congressman Chris Lee's (NY 26) vote against the stimulus package that was approved tonight by the House of Representatives.

Phil Jones, the Livingston County Democratic Chair, stated, "We are extremely disappointed that Chris Lee chose to put party discipline over the needs of the people of the 26th District and the entire nation tonight by voting against the recovery plan. We face new layoff announcements in the thousands every day in this economy, but following his party's marching orders seems more important to Mr. Lee than trying to implement constructive solutions." 

Genesee County Democratic Chair Lorie Longhany noted the fact that President Obama and Democrats in Congress had consistently worked to gain Republican support for the stimulus bill, adding additional tax cuts and getting rid of some specific spending to which Republicans objected. "But the Republicans, and regrettably Congressman Lee, decided they would rather oppose all efforts and simply obstruct all good faith attempts to work with them. Things are tough; we don't have time for these games." 

Harold Bush, the Democratic Chair of Wyoming County, pointed out, "President Obama even went to Capitol Hill itself in an attempt to get at least some of the Republicans to work together with him on economic recovery.  It's a shame Chris Lee didn't put the interests of our district ahead of those of his party leadership."

Jeanne Crane, who is Chair of the Orleans County Democratic Committee, agreed. "We have always had representatives in this district who were more concerned with serving their party than serving us. It's a shame that hasn't changed."

Andrew Erbell

Per Harold Bush; "President Obama even went to Capitol Hill itself in an attempt to get at least some of the Republicans to work together with him on economic recovery.

No, he didn't. He wants Republicans to be on board because if this bloated largess package fails, the President doesn't want them to be able to use it as a campaign issue in two or four years. That's what ALL politicians do.

Bounce all the "talking points" back & forth you want. Facts are, you can't buy you're way out of debt. It won't work as an individual, it certainly doesn't work in the business world, and people who think the government can do it are just kidding themselves. All the bullying and prodding aside, you have to either earn more money or cut expenses, and in most cases you need to do both.

Jan 29, 2009, 2:26pm Permalink
Adama Brown

Phillip, the spending makes sense when you think about economics. For instance, that $6 billion for broadband. Studies have shown that increased availability of internet access, particularly broadband, results in a better educated populace and enables things such as "on-shoring" support jobs to US small towns, instead of sending them to India.

That digital TV money is being sent into retail stores to buy converter boxes. The STD prevention money saves billions more in healthcare costs down the road.

95% of what Lee objects to is either construction related spending, which pays back into the economy nearly double its cost, or stuff that has real-world benefits.

As far as modernization goes, think about the technological upshift in the last 8 years. The Bush administration really did very little to take advantage of the opportunities that presented for improving the efficiency of government.

Jan 29, 2009, 3:01pm Permalink
michael barney

Chris Lee could post his shopping list for a trip to Wegmans and the local Dem chairs would find something negative in it. I was told by a Dem friend of mine involved with GLOW locally that the GLOW Dem chairs are going to do a negative news release every time Lee votes. Then again there are not a lot of elected Democrats in GLOW so it is probably akin to a tempest in a teapot!

Jan 29, 2009, 3:20pm Permalink
Daniel Jones

Michael-Are you serious? It's the job of the Democratic chairs to hold Chris Lee's feet to the fire and stand up for Democratic values.

Who's your friend?

Jan 29, 2009, 3:25pm Permalink
Howard B. Owens

Here's <a href="">another GOP-leaning perspective</a> questioning whether this package will really work.

And here's a piece that covers <a href="">the fact that neither Hoover's New Deal, nor FDR's New Deal</a> (both massive government intervention into the markets) did anything to end the Depression, but actually made it much worse. Only after the War, when industry returned to a focus on consumers rather than constrained by government, did the Depression end.

Jan 29, 2009, 3:27pm Permalink
Adama Brown

Michael, I don't know who told you that, but it's wrong. Just check the votes against the press releases.

Howard, no amount of spin by "American Conservative Magazine" is going to change the facts of history: that both the Depression and the current downturn were caused by massive run-ups in deregulation and unrestrained market activity.

In this most recent case, we have the hard proof in the form of the legalization of credit-default swaps and the unrestricted growth of the sub-prime mortgage industry, which people were starting to warn about as early as 2005.

The idea that the regulations put into place by FDR--things like bank guarantees, child labor laws, Social Security, etc--weren't responsible for the economic reform of the 30s' is the worst kind of historical whitewashing.

Jan 29, 2009, 3:43pm Permalink
Richard Gahagan

The depression was caused by Democratic policies requiring banks to lend money to low income families that could not pay it back. Barney Frank should be in jail, ironic that the man that was the most reponsible for this mess is now working on the "stimulus" package to fix the mess he created.

Jan 29, 2009, 4:00pm Permalink
Philip Anselmo

Adama: You make a fine case. For sure. Nevertheless, I find that nothing ever makes sense when I think about economics. For those who don't know, the name of the branch of mathematics that best describes economic activity is: Chaos.

Seriously, though. Everything you mention <i>sounds</i> good. But many of our national representatives made up the same cast of characters who pushed through the bailout last year that was supposed to buy up "toxic assets" from the banks so that they would then feel more inclined to start giving people loans again. What happened there was that we — we as in us, the taxpayers — gave the banks billions of dollars with the hope that the banks would then "do the right thing." One problem. Once the banks got that money, they just kept it. They didn't do anything. This was documented. Nothing. Or, what about the president of GM, who when he was asked by an NPR reporter about what sort of changes the auto company would have to start making now that the American people were footing the bill — don't forget we just gave them a whole lot of our money — replied about how he could no longer take private jets and stay in five star hotels!

So when we say that if we spend this money on broadband to connect the unconnected parts of the country so that companies can then opt to hire Americans rather than outsource the kind of jobs that broadband access opens up... why should we honestly expect that to happen? Companies don't outsource to India because India has broadband and Backwoods, Indiana doesn't. They do it because they don't have to pay Indian workers the same as what they would have to pay Americans.

I simply cannot understand how anyone can justify so many of these provisions when it's so clear that we're in the midst of an economic recession and only heading further down. I can fully appreciate such provisions as extending unemployment coverage and offering tax cuts to families. But most of the rest of it... I don't know. There are too many: 'Well, studies say...' and 'Well, if we do this, then...' No?

Jan 29, 2009, 4:14pm Permalink
Lori Ann Santini

Tell me if this package is going to be any better than the Bank bailout. The executives went crazy spending money at resorts and "meetings" afterwards. They got a verbal reprimand for their poor behavior. Then came the auto makers. Once again, give me - give me - give me. They are worse then teenage kids wanting a cell phone.

Although the economy needs a boost, this is too much. What type of economic boost do you really think this is? My one year old now owes money towards paying off this deal. His grandkids will still be paying.
My suggestion is that people get back to a simple life. Stop buying on credit. If the cash isn't in your pocket/checking account then you can't and shouldn't buy it. It is all too easy to say you will pay it back. Learn from me, it isn't. It has taken me 7 years of monster payments to beat the debt. I don't want to go back there. Unfortunately the government has sucked me in. Can a person sign the government up for credit counselling?

Jan 29, 2009, 4:15pm Permalink
Adama Brown

Richard, I think you'd be hard pressed to put any facts behind that talking point. Subprime lending started to take off during the early 2000s when regulations were being slashed and the Democrats on Capitol Hill were basically a brunch club.

Sub-prime lending wasn't motivated by government regulations, it was motivated by the ability to treat mortgages as commodity investments that could be speculated on to inflate the price. It's the same way the "Enron loophole" was used to game the commodity markets for oil.

Jan 29, 2009, 4:15pm Permalink
Adama Brown

Phillip, thanks. And you're right to an extent: economics doesn't always make sense because it's as much an art as a science. Even the guys who are experts--and I don't pretend to be one, I'm just well read--can't always make correct calls.

In this case though, I'd equate the stimulus package to a shot of adrenaline straight to the heart: not really intended to fix the problems that put the patient there, but to keep them alive through it. It jumps some money straight into manufacturing and construction, which are known to circulate it around to the rest of the economy.

What you and Lori both mention has the same basic answer: the difference that has to be there is oversight. For 8 years we've had an administration that treated oversight as a dirty word, combined with congressional Democrats who either were utterly powerless, or--since the beginning of 2007--seemed to look at the White House, get discouraged, and walk away.

Hopefully that's changing, like the hammer coming down on Citigroup buying a new $50 million dollar corporate jet. Companies have got to know that feeding at the trough is over, and it's time to get back to work.

Jan 29, 2009, 4:30pm Permalink
Richard Gahagan

The pressure to make more loans to low income families started during the Carter Administration (read: to borrowers with weak credit histories) became relentless. Congress passed the Community Reinvestment Act, empowering regulators to punish banks that failed to "meet the credit needs" of "low-income, minority, and distressed neighborhoods." Lenders responded by loosening their underwriting standards and making increasingly shoddy loans. The two government-chartered mortgage finance firms, Fannie Mae and Freddie Mac, encouraged this "subprime" lending by authorizing ever more "flexible" criteria by which high-risk borrowers could be qualified for home loans, and then buying up the questionable mortgages that ensued.

Jan 29, 2009, 4:44pm Permalink
Chris Charvella

To give credit where credit is due, the CRA was strengthened by George H.W. Bush by way of more regulation and then weakened when Bill Clinton relaxed those regulations.

Jan 29, 2009, 5:00pm Permalink
Adama Brown

I'll just add that the purpose of the Community Reinvestment Act, which was passed in 1974, was to prohibit banks from refusing people loans based entirely on "race, color, religion, national origin, sex, marital status, or age." Nothing about income--the point was to stop banks from "redlining," defining certain predominantly black or immigrant neighborhoods to which they would not loan under any circumstances, no matter how good the person's credit.

If you're looking for legislation that caused this, a lot of people agree that the biggest contributor to the financial meltdown is the Gramm-Leach-Bliley Act, which effectively gave the financial industry the ability to merge investment with depositing all under the same umbrella, resulting in the commoditization of loans.

The Gramm who the act is named after, Ex-senator Phil Gramm of Texas, is also the guy who you can thank for letting Enron's own lobbyists write the "Enron loophole."

Jan 29, 2009, 10:40pm Permalink

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