Economists also believe that when additional funds are targeted to those who need it most, like the poor and older people, recipients tend to spend the funds more readily. Thus, the House plan offers the states $87 billion to offset rising Medicaid costs and roughly $43 billion over two years to extend and increase unemployment benefits. The bill also adds as much as 33 weeks of unemployment benefits for states with the highest unemployment rates.
So while some Republican legislators complain that the bill’s spending component is excessive, the nation’s governors last week demanded that the Senate act quickly.
“States are facing fiscal conditions not seen since the Great Depression—anticipated budget shortfalls are expected in excess of $200 billion,” the National Governors Association said in a statement. “Governors … support several key elements of the bill critical to states—increased federal support for Medicaid, and K-12 and higher education; investment in the nation’s infrastructure; and tax provisions to spur investment.”
Expect an open but contentious debate on the Senate floor, though Democrats, who control both houses of Congress, have pledged to their new president that they will complete action before a scheduled congressional recess on Feb. 13. But few are booking their tickets home quite yet.
Michael Zielenziger is based in Oakland, Calif., and writes on business and the economy.