February 13, 2009

Stimulus Package Limits Funding for Education

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In addition to the $8.7 trillion that the U.S. government has already pledged last November in order to restore the crumbling economy, the Senate and House now have compromised on an additional $789 billion bill in the form of a stimulus package towards the efforts.
The new bill, which cut $30 billion from the House version and nearly $50 billion from the Senate version, redistributed funding across the board. According to the New York Times, funding for education took one of the biggest hits. State fiscal stabilization funds that were to be used towards education were cut by $25 billion from the original bills. Senate Republicans, however, agreed to increase the general state fund to $54 billion. House Democrats also compromised, demanding that states should be allowed to use some of the money towards school renovation and repairs. According to Inside Higher Educaton, an online higher education newspaper, as of Wednesday night, it was still unclear whether or not this money could be used to improve college buildings or could merely be used on elementary and secondary schools.
While previous versions of the bill called for greater spending on Pell Grants and work study programs, the details of the compromise in regards to these subjects are not yet clear.
“It appears the final agreement does include a $400 boost in the maximum Pell Grant award to $5,250 … Also, the tax cut of $2,500 for tuition and related expenses appears to have survived,” stated Stephen Johnson, vice president of government and community relations, in an e-mail.
According to Inside Higher Ed, the compromise will put $200 million towards work study programs and keep the $2,500 partially refundable tax credit for higher education expenses. $40.6 billion would be also given to states to prevent cutbacks and for school modernization. Lastly, states would receive $5 billion of bonus grants for meeting certain education performance standards, as well as $8 billion for other public safety needs that could possibly include education.
However, college lobbyists were told that the compromise does not include an increase in federal limits on unsubsidized student loans, nor does it propose a raise in the spending on Perkins Loans.
While this package does increase some funding where it is desperately needed, some feel that it is not doing enough for social issues and programs.
“I’m disappointed with the Democratic majority for compromising on things that were desperately needed by the poor, states, cities, and schools. Why take out tax cuts, state and city aid, and school construction funding, all of which are highly stimulative?” stated John-David Brown ’09, vice president of the Cornell Democrats, in an e-mail.
Prof. Elizabeth Sanders, government, also feels that the Democrats let some important issues go, specifically when the Senate passed its original version of the stimulus bill.
“[Senate Democrats] gave [Senate Republicans] a lot and they gave up stuff that we really cared about, and that may make [the bill] less effective as a stimulus because there will be less construction and fewer people going to work,” Sanders said.
Not only do some criticize the package as letting go of important issues, but others also feel that the bill will not do enough to stimulate the economy. Some also think that the bill focuses too much on social programs and initiatives.
“It seems as if some in Congress are more concerned with reviving programs denied to them over the last eight years than writing a bill that is truly going to stimulate the economy and provide long-term job security for the millions of Americans currently unemployed,” stated Rey Mensah ’11, president of College Republicans, in an e-mail.
In addition to education, Obama’s middle-class tax cut proposal fell to $400 for individuals and $800 for couples, trimming the original plan by $30 billion. Social security and disability payments also decreased, while the original $15,000 tax incentive for home buyers that was introduced by the Senate was cut down to $8,000 for only eligible first-time buyers.
Health insurance programs, specifically Cobra, were also scaled back by the new bill. Cobra refers to a government program that entitles eligible individuals to continue with his or her health plan for limited times after losing a job. While the House proposed a 65 percent government subsidy for private insurance for one year after losing a job, the latest version calls for a 60 percent subsidy for only nine months. The House’s proposal to allow states to provide temporary Medicaid to the unemployed who do not quality for Cobra was also eliminated.
Moreover, the new version held onto an extension of unemployment benefits proposed by the Senate, exempting the first $2,400 of benefits seen by unemployed individuals from federal taxes. A $70 billion provision also protects middle-income taxpayers from paying the alternative minimum tax in 2009.
Lastly, the new bill devotes over $15 billion to research, including programs such as National Institutes of Health, National Science Foundation, Biomedical Research Agency and the Department of Energy.
After much back and forth, the new stimulus compromise has to be approved by both the House and Senate before Obama can sign it into legislation. Reports state that Obama hopes to sign the legislation by Monday.