Winners and Losers in the Massive $825 Billion Stimulus Proposed by House Democrats

Much of the cash would go toward infrastructure, education, energy, and healthcare, but not defense.

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Governing, it's said, is all about making choices, so the ink was barely dry on the $825 billion draft economic stimulus package unveiled today in the House of Representatives when people began calculating winners and losers—and issuing critiques.

There are dozens of potential winners in the gargantuan package, from highways to health-information technology, from nuclear power to NASA, from first-time home buyers to food-stamps recipients, from unemployed workers hitting the pavement to college students hitting the books.

In announcing the much-awaited proposal, House Speaker Nancy Pelosi pledged, "It will strengthen the middle class, not just Wall Street CEOs and special interests in Washington." She and fellow House Democrats have proposed spending $550 billion over two years, with tax relief ratcheting up the tab by another $275 billion during that time. Big winners: education, energy, healthcare, science, technology, the unemployed, and cash-strapped states.

A key element is a refundable tax credit of $500 per worker or $1,000 per couple, phasing out for those earning $200,000 or more. Democrats say 95 percent of U.S. workers would benefit.

On the spending side, a mere summary of the proposal, which is subject to approval by Congress and needs the incoming president's signature, ran 20 pages. Here's a glance at some of the 11-figure items:

  • $87 billion for states to pay for Medicaid
  • $79 billion for states for fiscal relief
  • $31 billion for public infrastructure
  • $30 billion for the unemployed to pay for healthcare
  • $30 billion for highways
  • $27 billion for unemployment benefits
  • $20 billion for health-information technology
  • $20 billion for food stamps and nutrition assistance
  • $19 billion for water projects
  • $16 billion for public housing
  • $15 billion for Pell grants for college students
  • $14 billion for school modernization
  • $13 billion for special education
  • $13 billion for disadvantaged students in K-12
  • $11 billion for the electric grid
  • $10 billion for scientific research.
  • Importantly, the massive proposal fell below the trillion-dollar mark—a psychological bar as much as a fiscal one—meaning it's less than the $1.3 trillion that some top economists had been advocating to yank the nation's economy out of recession. Still, the proposal represents a staggering spending bonanza. Pelosi and fellow Democrats insist some strings are attached: No earmarks, no pet projects, and total transparency about where the money goes.

    Top Republicans in the House were quick to condemn the proposal, though their votes are not necessary for passage. Republicans could hold things up in the Senate, however. Democratic senators are putting final touches on their own wish list just as members on both sides of the aisle study Pelosi's plan. "People are going to want to review it, make changes, offer amendments, and shift priorities," said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell.

    Republicans, who are in the minority in both the House and Senate, are escalating their attacks and have formally proposed a wide range of tax cuts as an alternative to mammoth spending. They warn against runaway spending, urge that the private sector—not the public sector—create new jobs, and express alarm about saddling future generations with trillions in new debt. Some in the GOP could sign on to the spending, though, in light of dire needs back home.

    President-elect Barack Obama, who takes the oath of office Tuesday, will begin selling the proposal to Middle America tomorrow when he is to tout it during a visit to a wind-turbine manufacturing plant in Bedford Heights, Ohio. According to Pelosi, the plan is a first crucial step toward his pledge of creating or saving 3 million to 4 million jobs.

    Altogether, the proposal contains about $25 billion less in tax relief than had been sought by Obama and his economic team. It ignores pleas from defense contractors to ramp up spending on weapons systems but does help service members and veterans. And it is not responsive to the headline-grabbing pleas—for a Mafia museum in Las Vegas, a polar bear exhibit for Rhode Island, and a bailout for the porn industry—that have been circulating in recent weeks.