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Economic Recovery Act discussions in June (AP Photo/Monsivais)
Congressional Democrats are exploring the possibility of extending a number of benefits and credits that would total nearly $200 billion, but these costs would come in addition to the current $787 billion stimulus package. This proposal would include unemployment and health benefits, extending a tax credit for first-time homebuyers, and creating a new credit for employers who add jobs. Also under consideration is a Republican proposal that would allow companies operating in the red to receive tax refunds from the previous five years instead of the two currently allowed by law.
The costs add up quickly. According to the Center on Budget and Policy Priorities, extending unemployment benefits through next year would cost about $100 billion. Economists estimate that if the homebuyer tax credit were to be extended to summer 2010, the costs would add up to the tune of about $16.7 billion. An employer tax credit proposal that had been removed from the stimulus plan was calculated to cost $19.5 billion. Unknown is what an extended tax refund would look like or how much it would cost to extend subsidies for laid-off employees who are having to utilize the very expensive COBRA health plan, but the current program that runs until the end of 2009 costs about $25 billion. Toss into the mix that President Obama would like to spend an additional $13 to $14 billion on $250 payments to Social Security recipients, and the proposals could quickly add up to nearly $200 billion.
A majority of the current stimulus has not yet been spent, so congressional leaders are hesitant to call the current proposals another stimulus plan. Hesitancy also stems from the fact that unemployment continues to rise even though many Democrats insist the current stimulus has helped the economy. Some, like House Minority Leader John Boehner (R-OH), have suggested the proposals should use funds from the $787 billion package instead of continuing to add to the nation’s deficit.
In regards to a package that would credit employers for adding jobs, House Speaker Nancy Pelosi (D-CA) is first waiting for economists to weigh in with their opinions. “What is it that we can afford? What works the fastest?” she questioned.
Amid concerns over its implementation, the original employer credit plan was scrapped in February during stimulus negotiations. Senator Arlen Specter (D-PA) proposed a plan that would award a $4,000 tax credit for each new employee, but without knowing how many workers would actually be hired there was no way to estimate a total cost.
For more info: Democrats May Not Call It 'Stimulus' but Cost of Relief Proposals Adds Up
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