Summary: Yesterday, the House of Representatives introduced legislation, the "American Recovery and Reinvestment Bill of 2009" ("the Act"), as the latest step in the ongoing debate in Congress as to how to address the nation’s economic woes. The Act totals $825 billion in new spending, including $275 billion in tax cuts, and $550 billion in spending and aid to the states. It is expected to be referred to two committees in the House of Representatives, Appropriations and Ways and Means, for separate hearing and vote next week before heading to the full House for a vote. It is also expected that the Senate will introduce its own version of this legislation shortly and hold its own set of congressional hearings and votes. The differences in both versions of the stimulus legislation will have to be reconciled before the legislation heads to President-elect Obama’s desk for signature. That is expected to happen by no later than Feb. 13, 2009, per congressional leaders.
- Not a Christmas Tree. As noted in prior updates, this legislation contains no directed spending for specific projects, i.e., no “earmarks.” This was done deliberately by the Democratic Majority and the incoming Obama administration. As Vice-President elect Biden put it recently, this will not be a “Christmas Tree,” i.e., loaded with pet projects to gain members’ support. Spending is set up by formula and competitive grant requirements, with specific rules on how funds are to be spent.
- Time is of the essence for infrastructure projects. The Act notes that for infrastructure projects, “recipients shall give preference to activities that can be started and completed expeditiously, including a goal of using at least 50 percent of the funds for activities that can be initiated not later than 120 days after the date of the enactment of the Act.” (Section 1102)
- Use it or lose it for infrastructure projects. Each recipient of infrastructure funds “shall enter into contracts or other binding commitments not later than 1 year after the date of the enactment of this Act (or not later than 9 months after the grant is awarded, if later) to make use of 50 percent of the funds awarded, and shall enter into contracts or other binding commitments not later than 2 years after the date of the enactment of this Act (or not later than 21 months after the grant is awarded, if later) to make use of the remaining funds.” (Section 1104(a)) Any funds not committed in this matter shall be recovered, de-obligated and redistributed. (Section 1104(b))
- Transparency requirements. "Each contract awarded or grant issued…shall be posted on the Internet and linked to the website Recovery.gov.” (Section 1201)
- Accountability requirements. The Act creates a “Recovery Act Accountability and Transparency Board” to “conduct oversight of Federal spending under this Act to prevent waste, fraud, and abuse.” (Section 1221)
- Special contracting provisions. The Act states that “the Federal Acquisition Regulation (FAR) shall apply to contracts awarded with funds made available in this Act. To the maximum extent possible, such contracts shall be awarded as fixed-price contracts through the use of competitive procedures. Existing contracts so awarded may be utilized in order to obligate such funds expeditiously. Any contract awarded with such funds that is not fixed price and not awarded using competitive procedures shall be posted in a special section of the website Recovery.gov.” (Section 1205)
Spending and Tax Provisions:
Overall, spending provisions in the Act would provide $141.6 billion for education; $124.1 billion for health care; $102 billion in assistance to workers for job training and unemployment benefits; $90 billion for transportation infrastructure; $87 billion to help states with Medicaid costs; $54 billion in energy spending; $16 billion for science- and technology-related programs; and $4 billion for state and local law enforcement funding. Tax provisions include a $500 payroll tax credit for individuals making less than $75,000, and $1,000 for couples making less than $150,000. They also includes increases to the child tax credit, as well as tax breaks for education and new homebuyer tax incentives.
Key Infrastructure Spending:
Both the House Appropriations and Ways and Means Committees have drafted summaries of the Act, which are attached. We note the following infrastructure spending features from these summaries:
- Highways and Bridges. $30 billion for highway and bridge construction projects
- Mass Transit. $1 billion for new commuter and light rail mass transit systems; $2 billion to modernize existing mass transit systems; $6 billion to purchase buses and improve intermodal and transit facilities
- Public Schools. $20 billion for renovation and modernization of public schools, from kindergarten to college, including technology and energy-efficiency upgrades
- Wastewater. $6 billion for loans to help communities upgrade wastewater treatment facilities
- Drinking Water. $2 billion for loans for drinking water infrastructure
- Renewable Energy. $11 billion for new electricity transmission and grid improvements to link renewable energy sources, including wind and solar, to consumers
- Advanced Batteries. $2 billion to fund programs authorized to support the U.S. manufacture of advanced vehicle batteries and battery systems under the Energy Independence and Security Act of 2007 ("EISA"). (42 U.S.C. 17012 et al.) This includes $1 billion in incentives to pay for expenses necessary for the manufacture of advanced batteries, subject to EISA's reimbursement cap of 30 percent of cost. (42 U.S.C. 17013(b)(1)(B)) This funding is likely to be distributed in grant form. Additionally, it includes $1 billion to fund the Advance Battery Loan Guarantee program, also authorized under EISA, which supports "the construction of facilities for the manufacture of advanced vehicle batteries and battery systems." (42 U.S.C. 17012(a))