Dem says tax cuts blunted the stimulus

Congress cut taxes by too much and did not include enough money for transportation projects when it passed a $787 billion stimulus bill this year, the Democratic chairman of the House Transportation and Infrastructure Committee said Monday.

Rep. Jim Oberstar (Minn.) stopped short of saying Congress should move a second stimulus, as some Democrats have recently suggested. But he told The Hill on Monday that lawmakers could create jobs by passing his own big-ticket public-works legislation: a $500 billion surface transportation reauthorization bill.

ADVERTISEMENT
Oberstar defended the $27 billion in the stimulus for highway and bridge projects as the right amount to help the economy during the next year. However, he said that more transit money in the stimulus would have been helpful to an economic recovery over the next three years, rather than the nearly $300 billion in tax cuts.

“Not many people realize they got a tax cut,” Oberstar said. “I have not received a single e-mail, phone call, snail mail, personal comment from anybody since we enacted this bill, since the end of February, saying, ‘I got my tax’ or ‘Thanks for the tax cut’ or ‘I hardly noticed it’ or anything.

“But I have had people saying, ‘I’m back at work because of the funding in the surface transportation program.’ ”

Oberstar’s remarks come as Democrats are second-guessing the effectiveness of the stimulus bill they passed with little Republican support in February. The legislation has been criticized for not creating enough jobs. The June unemployment rate hit 9.5 percent, a 26-year high.

Vice President Biden said last week that the Obama administration had “misread” how bad the economy was. Biden, House Speaker Nancy Pelosi (Calif.) and other top Democrats haven’t ruled out a second stimulus, but they said that the $787 billion recovery package needs to be given more time to work.

But off Capitol Hill, momentum has grown for more public-works spending to create jobs. In addition to Oberstar, Pennsylvania Gov. Ed Rendell (D) and Laura Tyson, a member of the president’s Economic Recovery Advisory Board, have said that another stimulus with billions for infrastructure and transportation may be needed to boost the economy.

“It’s what produces jobs, and produces orders for factories — American factories,” Rendell said during a House hearing on the first stimulus last week.

Oberstar said a better option than a second stimulus would be to pass his bill authorizing highway, rail and mass transit projects over the next six years. He also said Democrats need to be more patient with the first stimulus.

“Let’s make sure this portion is working well before you talk about the next one,” Oberstar said of the first stimulus. He expects by Labor Day to see 250,000 new construction jobs, another 30,000 jobs in bus and train manufacturing and 25,000 new jobs for work on water projects.

“All of that is moving and the pipeline is in full swing. Then, I think by March of next year, you could reassess and move ahead with a second injection,” he said.

One thing he’s sure of is that Democrats focused too much on tax cuts in the stimulus bill.

President Obama at one point suggested that 40 percent of the stimulus be in tax cuts — a move intended to win over Republican votes. But Democrats settled on $287 billion, or about 36 percent of the bill’s total. The effort only resulted in three Republican votes — all in the Senate.

Oberstar said those cuts would have been put to better use in transportation projects.

“We did not overstate the possibilities, but I think we clearly could have put $300 billion in highway, bridge, transit, airport, water, wastewater treatment and the U.S. Army Corps of Engineers,” he said.

More in Finance

House Dems block charitable tax bill

Read more »