Republican leaders in US want more tax relief in economic stimulus

January 26, 2009 As the newly inaugurated Barack Obama administration continues to push for a US$825 billion stimulus package to aid the struggling United States economy, some Republican legislators say they will not vote for such a plan without the inclusion of more tax cuts and less "unnecessary" spending.

Arizona Senator John McCain, Obama's general election opponent and a leading voice within the Republican Party, says he would not vote for the American Recovery and Reinvestment Plan as it currently stands. Appearing on Fox News Sunday yesterday, McCain echoed his campaign platform in saying, "We need to make tax cuts permanent, and we need to make a commitment that there'll be no new taxes."

McCain and other Republicans say they are unhappy with the bill introduced in the House of Representatives, which combines roughly $550 billion in domestic spending with $275 billion in tax cuts. McCain believes not enough Republican proposals have been integrated into the plan, which he fears will result in the plan becoming "just another spending project" rather than a job creator.

"Republicans have not been brought in, to the degree that we should be in, to these negotiations and discussions. So far, as far as I can tell, no Republican proposal has been incorporated," McCain said. "We're losing sight of what the stimulus is all about, and that is job creation."

The Arizona senator is known for his bipartisan efforts in Washington, D.C., but he defined his role in the new Senate as the "loyal opposition", which does not mean "that I or my party will be a rubber stamp" for Obama, he said. In his first weekly address since being sworn in, President Obama explained the stimulus plan in further detail, calling it a plan to "immediately jumpstart job creation as well as long-term economic growth." He outlined several of the bill's priorities, including the creation or salvation of up to four million jobs, as well as sweeping investments in health care, education, energy and infrastructure.

Among these investments are a new electricity grid with more than 3,000 miles of transmission lines, the weatherization of 2.5 million homes, health insurance protection for more than 8 million Americans, a renovation of over 10,000 schools, a project to repair thousands of miles of roadways, and an expansion of broadband Internet access.

Obama also laid out the rationale behind the stimulus, saying that "unprecedented action" is necessary in order to prevent further economic distress. "Our economy could fall $1 trillion short of its full capacity, which translates into more than $12,000 in lost income for a family of four," Obama said. "In short, if we do not act boldly and swiftly, a bad situation could become dramatically worse."

The president addressed the skepticism surrounding the stimulus package, pledging to "root out waste, inefficiency, and unnecessary spending", while holding the government accountable for its actions. "We won’t just throw money at our problems," Obama said. "We'll invest in what works." Still, Republicans such as House Minority Leader John Boehner are skeptical of the plan's effectiveness in rebuilding the economy. "I think a lot of Republicans will vote no because it's a lot of wasteful Washington spending", he commented on Meet the Press, repeating McCain's call for less federal spending and more tax cuts.

Examples of "wasteful" spending cited by Republicans include millions of coupons to aid in the digital television transition, $200 million for new sod on the National Mall, and $360 million to fight sexually transmitted diseases, which includes funding for contraceptives. House Republicans have claimed it will take 10 years before the economy feels the effect of a stimulus, and that the combined spending of the stimulus and the financial bailouts of last year will leave future generations with over $2 trillion of debt.

In response to the stimulus plan being pushed through Congress, Boehner and Republican Whip Eric Cantor presented Obama with an alternative stimulus plan on Friday, one that relies exclusively on income and business tax cuts. "Our plan offers fast-acting tax relief, not slow-moving and wasteful government spending," Boehner said. The counterproposal includes an income tax reduction that would save families an estimated $3,200 a year.

Despite this opposition, the stimulus bill is expected to pass through Congress by mid-February, as the Republican minority does not have enough votes to stop its approval. Senate Minority Leader Mitch McConnell expressed a general support of the plan at a White House meeting with Obama and other congressional leaders. "I do think we'll be able to meet the president's deadline of getting the package to him by mid-February," McConnell said. The bill is expected to go before Congress for a vote on Monday, February 2.

Obama's top economic adviser Lawrence Summers defended the stimulus plan while on Meet the Press. He said the bill was intended to balance the long-term initiatives mentioned above with the tax cuts desired by Republicans. He also said Obama was committed to spending three quarters of the stimulus money within 18 months.