Ehlers Votes Against Stimulus, Renews Call for Ineffective Tax Cuts

Vern Ehlers Voted Against the Economic Stimulus Bill and Renewed His Call for Ineffective Tax Cuts

On Friday, Grand Rapids area Representative Vern Ehlers–along with the entire Republican delegation in the US House of Representatives–voted against the economic stimulus bill.

As we have reported before, the bill is certainly not perfect, but Ehlers–as he did in opposing the initial version of the bill–continues to push for a bill that would provide tax cuts as a means of stimulating the economy along with other rehashed Republican talking points.

In a statement, Ehlers said:

“We need an economic stimulus that focuses more on immediate job creation, tax relief for small businesses, and putting money back into the pockets of Americans. The bill passed in the House today does not do enough to help taxpayers now, when they need it most. Most of the money in the bill will not even be spent this year.

Tax relief, which could go into effect immediately, and have a real impact on millions of Americans, is lacking in the bill.”

However, many economists have questioned the value of tax cuts as a means for stimulating the economy and have specifically criticized the tax cuts within the stimulus compromise bill. The Center for Budget and Policy Priorities has published a number of pieces critical of tax cuts as stimulus.

It’s also worth noting, that while Ehlers was particularly harsh in challenging the cost of this bill and asking tough questions, he asked no such questions when he supported a similarly priced bailout of the nation’s financial sector.

Senate Stimulus Bill Includes more Unrelated Tax Cuts; would Create Less Jobs

The Senate Stimulus Package Focuses More On Tax Cuts And Less On Jobs

While things are changing rapidly as the House of Representatives and the Senate negotiate differences in the stimulus bills passed over the last week, critics are pointing out several deficiencies in the Senate Stimulus bill passed yesterday.

The Center on Budget and Policy Priorities reports that the Senate bill will be less effective as stimulus because it focuses more on tax cuts:

“The Senate has reduced spending, a fair amount of which was well-designed to stimulate the economy such as funding for state fiscal relief and school construction, and substituted new or expanded tax cuts that are not targeted and are unlikely to provide a substantial boost to the economy.”

The organization says that the expanded homebuyer credit, deductions related to new car purchases, and relief from the Alternative Minimum Tax would cost $116 billion over the next 11 years but would do little to improve the economic situation.

According to an analysis by the Center for American Progress, the Senate bill will also create 9 to 12% fewer jobs.

Changes in the Senate Bill versus the House Bill

Other changes in the Senate bill include:

  • $40 billion less for states facing massive budget deficits, half the amount provided by the House bill. States are facing $350 billion in deficits over the next two and a half years.
  • Larger tax breaks to money losing companies.

On Energy:

  • The Senate bill includes provision to transfer $500 million in loan guarantees for renewable energy projects to the Innovative Technology Loan Guarantee Program established under the Energy Policy Act of 2005. That program disproportionately supports nuclear power plants and “coal to liquid fuel” projects.
  • The House bill provides $6.2 billion to the weatherization assistance program, while the Senate bill provides less than half that amount, at a total of $2.9 billion. The weatherization assistance program provides funding for the installation of efficiency measures in low-income households.
  • The House bill has $6 billion to make federal buildings more energy efficient, which would reduce federal energy bills by $2 billion annually while employing thousands of people. The Senate program would spend only $2.5 billion for this purpose.
  • The House bill has $2.5 billion in funding for the Department of Housing and Urban Development’s energy and green retrofit program for assisted housing. The Senate has merely $118 million for this purpose. This program would create many jobs while reducing energy bills for publicly assisted homes.
  • The House bill allocates $2.4 billion for research and demonstration purposes of “carbon capture-and-storage” technology. The Senate allocation of $4.6 billion can also go toward funding plant efficiency improvements for integration with carbon capture technology.
  • The House bill provides $500 million for energy efficient manufacturing demonstration projects, which capture the waste heat energy of industrial facilities. The Senate bill provides no funding for such programs.
  • The House bill specifically allocates $500 million to green jobs training, out of a total of $4 billion for job training programs. The Senate bill has $250 million for job training in “high growth and emerging industry sectors,” which includes energy efficiency and renewable energy jobs.

On Healthcare:

  • The Senate bill excludes a House provision that would make Medicaid available to low-income and other unemployed workers.
  • The Senate bill initially provided support to help move the health care system toward better health promotion with support for immunizations, screenings, and other preventive service. This was eliminated by an amendment.
  • The Senate legislation, like the House bill, initially provided investments in workforce training to get more qualified workers into these positions, but an amendment eliminated this provision and missed an opportunity to expand and protect our health workforce.
  • An amendment reducing Senate investment in health information technology effectively downgrades support for technology jobs and needed industry reform.

Vern Ehlers: Economic Stimulus should Focus only on Jobs

Representative Ehlers Says Stimulus Bill Should Only Focus On Creating Jobs

After we reported last week on Vern Ehlers’ opposition to the recently passed economic recovery bill, Ehlers again appeared in the local media criticizing the bill as being too large and poorly thought out.

Ehlers Criticizes the Stimulus Bill in the Media

Yesterday on WZZM 13, Ehlers said the sole focus should be on creating jobs:

“If the people have jobs, a lot of the problems go away. If they don’t get jobs, the other problems magnify.”

Of course, Ehlers neglected to mention that the bill will create 158,000 jobs in Michigan.

In the Grand Rapids Press, Ehlers even went so far as to reject funding for the cash strapped Grand Rapids Public Schools. In the bill, GRPS would get $39 million in funding and schools in the Greater Grand Rapids area would receive around $96 million. Ehlers said the money–which would be aimed at funding construction and special education programs–is simply being used by Democrats “to support issues they would support anyhow” and that it is “going to turn into the biggest pork barrel spending ever.”

Ehlers has said the focus should be entirely on creating jobs, but he voted for an alternative Republican proposal that would have simply implemented a variety of long-sought tax cuts. That bill–sponsored by Michigan Republican David Camp–argued that tax cuts would stimulate job growth, although no clear connection was made.

Back in 2008, <a href="http://www.mediamouse.org/news/2008/10/ehlers-opts-to-ignore-constitu.php"Ehlers voted to spend $700 billion to bailout the financial industry. He also supported a controversial measure that gave tax rebate checks to US citizens with the goal of stimulating the economy. Ehlers was mildly critical of that bill, but seemed willing to support it because it was proposed by Republicans.

This year, Ehlers was one of the Republican Representatives approached by the Obama administration who thought that it might be possible to get the “moderate” Republican to support the bill.

Stimulus Bill Includes Corporate Tax Breaks

As a commenter pointed out when we last wrote about Ehlers and the stimulus bill, the bill is far from perfect. While Ehlers’ comments have been fairly ridiculous, much of the debate around the stimulus package has ignored the fact that it is full of proposals aimed at appeasing Republicans. For example, the bill includes billions in corporate tax breaks:

“At least $23.8 billion in corporate tax breaks have been included in the $825 billion economic recovery package in order to win backing from key business groups and their Congressional allies, even though the team that put the legislation together believes the breaks have little value in stimulating the economy and creating jobs.

Top beneficiaries include banks, telecommunication companies, railroads and oil, hotels, casinos, and both commercial and residential real estate firms.”

This approach has been criticized by many progressives and progressive leaning policy organizations. For example, the Center on Budget and Policy Priorities has published a number of papers and reports criticizing policies aimed at reducing taxes as a form of economic stimulus.

Michigan Tax Policy Slams the Poor

Michigan is one of only ten states that taxes families living in deep poverty. While its standing should improve next year when the Earned Income Tax Credit goes into effect, there are still additional steps that could be taken to ease the burden on the poor.

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Late last month, the Michigan League for Human Services highlighted a recent report that shows that Michigan’s tax policy is unnecessarily harsh on the poor.

According to the report, Michigan is one of only ten states that taxes families living in deep poverty. It is one of nine states to tax a two-parent family of four earning less than three-quarters of the poverty line ($15,902), and one of just six to tax a single-parent family with two children earning less than three-quarters of the poverty line ($12,398).

Michigan’s ranking should improve next year, as the Michigan Earned Income Tax Credit (EITC) will be available to Michigan families. However, the EITC has already been under attack when legislation was introduced to freeze the EITC because of shortfall in state revenues. The EITC is 10% of the existing federal EITC credit in 2008 and rises to 20% in 2009.

The Michigan League for Human Services has called for an expansion of the Michigan EITC to 25% of the federal EITC as well as a switch to a graduated income tax.

Michigan is one of only seven states with a flat income tax where everyone pays the same rate regardless of their earnings.

Where Your Tax Dollars Go: 42% to the Military

In 2007, 40% of income tax dollars went to pay for the military. The National Priorities Project has released its annual analysis of how income tax dollars are spent, including an analysis of how the average amount of federal income taxes paid by Michigan residents is being spent.

The National Priorities Project has released its annual “Where Do Your Tax Dollars Go?” report. It found that in 2007, the federal government spent 42% of income tax dollars on the military, whereas only 4% went to pay for education. Overall, when funding for the Iraq War is factored into the budget, military spending is higher than it has been at any point since World War II.

The median income family in Michigan paid $2,450 in federal income taxes in 2007. Here is how that money was spent:

* Military – $1,034

* Health – $542

* Interest on Non-military Debt – $251

* Anti-Poverty Programs – $212

* Education, Training & Social Services – $107

* Government & Law Enforcement – $95

* Housing & Community Development – $82

* Environment, Energy & Science – $65

* Transportation, Commerce & Agriculture – $37

* International Affairs – $25

The War Resisters League produces a similar publication each year estimating where income tax money goes. Due to a slightly different analysis, the War Resisters League reports that 54% of income tax dollars are spent on the military:

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The War Tax Resisters League also reports that the combined military spending by the Department of Defense and the government’s nuclear weapons programs is greater than the military expenditures of the next fifteen countries combined. The United States spends more than any other country on its military and accounts for 47% of the world’s total military spending.

New Numbers on the Cost of Iraq War for Michigan

The National Priorities Project has released a new analysis of how the ongoing occupation of Iraq is impacting the state of Michigan. The organization says that the cost of the Iraq War has already cost the state $13.9 billion, with an additional $2.2 billion (2008) and $3.7 billion (2009) expected to cost Michigan a total of $19.8 billion through 2009. Additionally, President George W. Bush’s proposed 2009 budget would decrease federal aid to state and local governments by $19.2 billion. For Michigan, this means $33.3 million in cuts for Community Development Block Grants that are currently benefiting 223 Michigan communities, $17.3 million in cuts for Low-Income Home Energy Assistance, $18 million in cuts for Social Services Block Grants, and $7.9 million in cuts for Section 8 Housing Choice Vouchers. The total amount of the cuts, $76.5 million, is equal to what Michigan taxpayers spend on the Iraq War in five hours.

Once again, we would like to use this opportunity to encourage folks to attend the antiwar march tomorrow organized by ACTIVATE (Grand Rapids SDS). The march begins at 12:00pm at Heartside Park (just south of the intersection of Ionia and Cherry) in downtown Grand Rapids.

Ehlers Votes for Flawed Economic Stimulus Package

Earlier this week, Representative Vern Ehlers voted in support of an economic “stimulus” package that would give tax “rebates” to the majority of taxpayers in the US. While this might encourage some spending, the package fails to address deeper structural issues with the US economy.

photo of vern ehlers

On Tuesday, Grand Rapids area Congressional Representative Vern Ehlers voted in favor of an “economic stimulus” package sought by President George W. Bush and brought before the United States House of Representatives. The bill–which was supported by an overwhelming number of Representatives (385 to 35) following a compromise deal hammered out by the Republicans and Democrats–has a primary goal of granting cash “rebates” to taxpayers in order to spur economic growth.

Yesterday, Ehlers sent out an email newsletter to his constituents explaining why he supported the stimulus package. He said that the bill was designed to “provide short-term stimulus to the economy to counteract recent signs of a nationwide recession” by “…inject[ing] $146 billion into the economy primarily through tax rebate checks issued to individuals and families.” According to Ehlers, two-thirds of the money will go to pay for the rebates with the remaining going to “tax incentives intended to spur business investment.”

However, despite voting for the bill, Ehlers expressed some muted criticism of it, stating:

“Although I voted for this bill, I am deeply concerned about its effect on our nation’s debt. We must do more to reign in spending so that our children are not saddled with our debt.”

Unfortunately, Ehlers voted in support of a bill that he might not have entirely supported. Similarly, the Democrats cut a deal with the Bush administration in order to pass the “stimulus” package without raising questions about whether or not the “rebates” are really the best way to provide assistance to those facing economic difficulties. At the same time, the Democrats caved on the issue of providing increases in food stamp and unemployment benefits. As passed in the House, the stimulus package gives a relatively modest amount of money to consumers while ignoring structural problems in the US economy.

Two progressive think-tanks, the Center for American Progress and the Center on Budget and Policy Priorities have both criticized the stimulus plan and argued that a more effective plan could have been passed by focusing on low-income workers. The House of Representatives removed two provisions–an increase in food stamp and unemployment benefits–that would have been a more effective means of stimulating the economy according to the Center on Budget and Policy Priorities. In a statement on the passage of the bill, the Center said that those two measures would have spurred more spending while the tax cut approach favored by the Bush administration typically means money is saved–not spent–by the middle and upper income families that benefit from the cuts. The Center also criticized the package for limiting the size of the rebate given to low-income workers:

“The principal weakness of the new rebate design is that it would provide smaller rebates to low- and moderate-income working families than to families at higher income levels, despite the fact that rebates provided to low- and moderate-income families are the most effective as stimulus. It also may be noted that the proposal does not cover the 22 million mostly low-income households who do not file income tax returns. It is nearly impossibly to reach such households through a tax rebate, but millions of these households could have been reached through a temporary increase in food stamp benefits. The food stamp provision, however, was dropped from the stimulus package.”

The stimulus package passed in the House fails to address structural issues such as a weak labor market, budget deficits, trade deficits, and an unsustainable housing boom according to the Center for American Progress. As such, the Center recommends a progressive stimulus package. Their package contains a number of proposals that we won’t here Representative Ehlers or the federal government talking about. These include calling for Congress to develop a means to help homeowners refinance their homes, legislation aimed at preventing foreclosures, federal aid to municipalities to address declining tax bases, uniform rebates to all tax-paying families, an increase in food stamp benefits, increasing the federal share of Medicare, increasing unemployment insurance, helping low-income residents pay their energy bills, funding job training and development programs in so-called “green” industries, and increasing spending on making homes more energy efficient.

The proposals raised by the Center for American Progress raise important questions. What kind of economy do we want? Do we want one in which the most vulnerable are ignored? What are our fundamental economic values?

New Iraq Spending Request would Cost Michigan Additional $4.1 Billion, Grand Rapids $81.4 Million

A new $45.9 billion spending request from the Bush administration would cost Michigan billions of dollars according to the National Priorities Project. The spending request comes in addition to $147 billion already requested for the 2008 Fiscal Year. The National Priorities Project places the current cost of the Iraq War for Michigan at a little over $12.1 billion, with taxpayers in Grand Rapids paying $238.8 million. With the new spending request, Michigan would pay an additional $4.1 billion while Grand Rapids would pay another $81.4 million.

Michigan Gaining Little from Military Expenditures

Despite claims that military spending creates jobs, only a small portion of the money spent on the military is making it back to Michigan. New research by the National Priorities Project analyzing numbers from 2005 shows that Michigan is among the ten states receiving the least amount of money back for what it pays in taxes for the military. According to the National Priorities Project’s numbers, only $0.39 on every dollar spent on the military comes back to Michigan in the form of military procurement contracts, salaries, wages, and grants. Moreover, approximately $391 billion is distributed each year by the federal government for the military across the fifty states, while substantially smaller amounts are allotted for Department of Education ($56.8 billion), Food and Nutrition ($50.6 billion), and Environmental Protection Agency (EPA) ($6.8 billion) programs. In Michigan, $1.67 billion is allotted to food and nutrition programs, $1.557 to education, and $223 million to EPA programs compared to a little over $5 billion allotted to military programs.

Kent County Black Elected Officials Announce Opposition to Recall Effort

On Wednesday, the Kent County Black Elected Officials group announced its opposition to a recall effort targeting Grand Rapids area Representative Robert Dean and nine other legislators across the state.

On Wednesday, the Kent County Black Elected Officials issued a press statement announcing its opposition to a series of recall efforts being coordinated by “anti-tax” activists who oppose the budget deal worked out earlier this month to avoid a shutdown of Michigan’s state government. The group is charging that the recall effort is “a senseless and divisive” tactic unfairly used to target the legislators “just because an elected official does his or her job due to the position that they hold.”

Locally, the recall effort is targeting Michigan House of Representatives member Robert Dean. The recall campaign against Dean is being run by Kent County Families for Fiscal Responsibility. The group has claimed credit for defeating August’s millage for Grand Rapids Community College and is touting the fact that similar recall efforts in 1983 were successful. Campaign spokesperson Jeff Steinport said:

“Michigan today by voting to raise taxes without any serious spending reforms. He failed to make the hard decisions to balance the budget with structural changes and instead took the easy route and raised the taxes on our already ailing Michigan economy. We simply cannot continue to spend money that we do not have. It is because of this reckless action that we feel the need to remove him from office before he does more damage to our families and businesses.”

Last November, Steinport ran as the Libertarian Party candidate against incumbent 3rd Congressional District Representative Vern Ehlers. Steinport is a longtime Libertarian activist who has authored articles for the Mackinac Center for Public Policy and who has campaigned against Grand Rapids’ Rapid public transit system.

At the statewide level, the Michigan Taxpayers Alliance–chaired by former state representative Leon Drolet–is targeting ten state legislators. Interestingly, the individual identified as “president” of the organization is Massachusetts resident Grover Norquist, who represents Americans for Tax Reform. Norquist is a prominent anti-tax activist who has worked for a number of organizations ranging from the American Conservative Union to the Victims of Communism Memorial Foundation. Other members of the board include David Littman a senior economist at the Mackinac Center for Public Policy and an economist at Comerica Bank, Ray Wilson of the Kalamazoo County Taxpayers Association, Rose Bogaert of the Wayne County Taxpayers Association, Darin Chase of Homesite Mortgage, David Grudzyski of Lasercom Mail Services, and Steve Thomas of Detroit Athletic Company. The last three of whom “bring to the MTA decades of activism on behalf of taxpayers, small business and property owners” according to Leon Drolet.

The Kent County Black Elected Officials statement:

“We, the membership of the Kent County Black Elected Officials are asking our constituencies and all of those people who believe in Democracy in this Great State and Country to oppose this senseless and divisive recall effort that is being perpetrated by Leon Drolet on a statewide basis and Jeff Steinport locally. We as a group feel that it is utterly ridiculous for this type of action to happen just because an elected official does his or her job due to the position that they hold. We are looking at this issue as an issue that has to be done on a bipartisan basis because neither Democrat nor Republican Representative should have to suffer this type of retribution for doing their jobs.

No one is in love with paying out more money from their budgets, however it seems that there was not a lot of choices that we had in this budget crisis. We applaud Governor Granholm, Speaker Dillon, House Appropriation Chair Cushinberry, and representatives Rev. Robert Dean, Wayne Kuipers, Steve Bieda, Marc Corriveau, Mary Valentine, Chris Ward, Ed Gaffney, Gerald VanWorkem and Velda Garcia for having the courage of principle to stand up and stand on the square and be counted in defending the state from a drastic shut down during the recent budget negotiations.

We are asking those of us that have like minds to let people through news releases and letters to the editors and in any form necessary to not support (Stop) this recall effort. If you see someone about to sign a petition then, make sure that you let them know that what they are signing is not the right thing to do. We, in a democracy, already have a mechanism to recall persons that is called election/re-election. If there is anything that we should be upset about it is the authors of the term limits. They are the real culprits here. Our institutional memory has been affected and taken away by term limits and we all have to share the responsibility for what is happening in our state because we voted for term limits and did not realize how bad it would be on us citizens.”