Senate Democratic leaders yesterday called for consideration of a second stimulus package that will focus on strengthening the nation’s economy over the long term by providing funds for infrastructure projects and other aid to states and cities.
“We need to have a short-term and a long-term” package, Senate Majority Leader Harry Reid, D-Nev., told reporters yesterday at a press conference after meeting with the several mayors to discuss the needs of cities.
The short-term stimulus is expected to come from economic package currently being negotiated by House leaders and Treasury Secretary Henry Paulson. The core of the roughly $150 billion package is expected to consist of some combination of cash rebates, tax breaks for businesses pushed by Republicans, and Democratic efforts to help the unemployed and those on food stamps.
Reid said longer-term stimulus should come from funding for infrastructure, in part, because the nation’s infrastructure is at the end of its useful life and rebuilding it will create jobs in addition to the benefits provided by improved roads and sewers.
“Why do we need a [long-term package?]” he asked. “Because for every $1 billion we spend as a government we create jobs, 47,000 high-paying jobs.”
Reid said it is possible that some infrastructure funding could still end up as part of the final short-term package. But other lawmakers and economists believe that the economic benefits of infrastructure projects do not tend to materialize quickly enough and should therefore not be part included.
Minneapolis Mayor R.T. Rybak, who spoke at the press conference, said he was encouraged after meeting with Sens. Reid, Charles Schumer, D-N.Y., and Debbie Stabenow, D-Mich.
“You don’t fix an economy by a single act … [you also need] long-term sustained investment,” Ryback said. “What I heard from the senators today in our meeting with the mayors is that they are looking at initial stimulus, but they are also looking systemically at these longer-term issues, and that is critical. Sadly, I don’t think this is a recession that is going to start this week and be done two weeks from now. It is going to require a long-term sustained plan.”
Ryback was mayor of Minneapolis last summer when the I-35W Bridge in collapsed, killing 13 and injuring more than 100.
Meanwhile, Senate Banking Committee chairman Christopher J. Dodd, D-Conn., sent Reid a letter calling for several proposals to be included in the stimulus, including $10 billion for the Department of Housing and Urban Development’s community development block grant program. CDBG provides grants to state and local governments to help fund economic development projects and can be used in projects financed by municipal bonds.
Dodd wants the funding to go to localities so that they can buy foreclosed homes, rehabilitate them, resell them, use them for rental property, or demolish them and develop the land.
“I met with several mayors this morning and they like the idea,” Dodd said after a press conference yesterday, adding that one foreclosure brings down the property value of surrounding homes.
The former presidential candidate also said that providing $2 billion to transit projects that are either under construction or part of the maintenance backlog of existing systems would create almost 100,000 jobs.
“While actual expenditures would be temporary and targeted, these projects would produce a lasting result that would increase future economic activity,” Dodd said in his letter.
Dodd also yesterday called for a longer-term stimulus package.
“Short-term stimulus, alone, is not enough,” he told reporters. “We must also take medium- and long-term steps to restore the confidence of consumers and investors in our economy.”
Also yesterday, House Republicans unveiled a raft of proposals, including reducing the corporate tax rate to 25% from 35%, which they hope will be included in the stimulus bill. Rep. Jeb Hensarling, R-Tex., and others, at a separate press conference, argued that the proposals would provide lasting economic stimulus and make the nation more competitive.
