President Obama and Congress are right to take swift and bold action on the stimulus, but it is just as important to get it done right as it is to get it done quickly. To move the economy forward immediately, the stimulus should focus on spurring investments to drive economic growth and removing roadblocks that will make American companies more competitive in the global market. With this in mind we have several concerns with the House version of the bill.
A truly effective stimulus package must have the proper balance of tax and spending provisions to trigger near-term economic growth while underpinning long-term economic growth. While we do support certain tax relief provisions in H.R. 1, the Chamber believes that the tax provisions in H.R. 1 are simply too small to have the desired impact.
These are timely, targeted, and temporary provisions which should be included to address the severe ongoing liquidity crisis, preserve and create jobs, and induce economic growth. These include:
- temporarily providing tax relief from cancellation of indebtedness income;
- temporarily allowing foreign subsidiary earnings of U.S. companies to be repatriated at a reduced tax rate;
- temporarily providing a payroll tax holiday;
- making TARP funds available to expand access to the Commercial Paper Funding Facility (CPFF) to Tier 2 commercial paper and to capitalize a Federal Reserve liquidity facility for commercial mortgage backed securities; and
- provisions that allow companies to address the financial crisis’ impact on pension funds.
On the spending side, many of the programs funded in H.R. 1 would help set the stage for long-term growth. However, there are others which will have no stimulative effect, and could actually make matters worse:
- The iron and steel “Buy American” requirement, which would undercut our international commitments and cause retaliatory sanctions in foreign markets.
- The open access and net neutrality requirements, which are unnecessary and would hinder broadband infrastructure investment, innovation, and consumer choice.
- The expansion of COBRA eligibility and duration, which imposes significant compliance burdens on and economic costs to employers with no preparation time for implementation.
- The refusal to extend the bill’s incentives to all clean energy technologies (such as nuclear energy), which, like renewables, would create jobs and reduce emissions.
The Senate Finance Committee has outlined some positive changes in the Senate version of the bill. We look forward to working with them to jump-start the economy.