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AMERICAN RECOVERY AND REINVESTMENT: Proposed Economic Stimulus Bill Contains Over $140 Billion in Education Funding

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“This economic stimulus package shows that as we shift from an industrial to an information economy, education is the new currency.”

Earlier this month, House Appropriations Committee Chairman Dave Obey (D-WI) released the details of an $825 billion economic stimulus bill designed to create jobs and jumpstart the American economy. The bill, dubbed the American Recovery and Reinvestment Act of 2009, is a mix of $275 billion in tax breaks and $550 billion in spending—of which, more than $140 billion would be devoted to education.

President Obama said the plan would “save or create over three million jobs, provide tax relief to struggling families and businesses that create jobs, and invest in priorities like health care, education, and energy that will make America strong and competitive in the twenty-first century.” He also called it a “significant down payment on our most urgent challenges.”

Nowhere was that down payment more obvious that in education. According to a summary from the House Appropriations Committee, local school districts would receive $13 billion in funding through the Title I program and an additional $13 billion through the Individuals with Disabilities Education Act. The legislation would also provide $20 billion for school construction, with $14 billion targeted for grades K–12 and $6 billion for higher education. It also includes $15.6 billion for a $500 increase in the maximum Pell grant and $1 billion for twenty-first-century classrooms, which includes computer and science labs and teacher technology training. (A sampling of other proposed spending for education programs is in the table below.)

 Program Name Proposed Spending
 Statewide Data Systems  $250 million
 Teacher Incentive Fund  $200 million
 Teacher Quality Enhancement Grants  $100 million
 Impact Aid  $100 million

In addition to this funding, states would also receive $79 billion in the form of fiscal relief to prevent cuts to education programs. Included in that total is $15 billion to states as bonus grants for meeting key performance measures, $25 billion to states for other high-priority needs which may include education, and $39 billion to local school districts and public colleges and universities that will be distributed through existing state and federal formulas, up to $325 million of which could go to an innovation fund.

“The down payment actually builds a lot of the proposed ‘education house,’” Bob Wise, the president of the Alliance for Excellent Education and former governor of West Virginia told the New York Times. “This economic stimulus package shows that as we shift from an industrial to an information economy, education is the new currency.”

Republicans have questioned both the size of the legislation and how quickly it could impact the economy. Instead, they favor a smaller bill that would focus on tax cuts and infrastructure projects that are more likely to create jobs quickly.

Pointing to “shovel-ready” projects like road and highway spending, Representative Jerry Lewis (R-CA), the ranking minority member on the House Appropriations Committee, said, “These are the types of infrastructure investments that will create sustainable jobs and should be given even greater priority within this package.” He also cautioned Democrats not to use the legislation as a “vehicle” to provide increases in domestic programs, which he said could create “unrealistic expectations for future spending.”

Because Democrats hold a sizeable majority in the House of Representatives and control fifty-eight seats in the Senate, they would only need the support of a handful of Republican to enact the legislation. However, many see the stimulus legislation as an early test of President Obama’s ability to follow through on campaign promises to bring more cooperation to the nation’s capital.

To that end, Obama met with Congressional leaders from both parties on January 23 to discuss the legislation. After emerging from that meeting, Senate Minority Leader Mitch McConnell (R-KY) said that the president struck him as “open” to Republican suggestions. House Minority Leader John Boehner (R-OH) was not as positive. “At this point, spending nearly a trillion dollars is more than we ought to put on the backs of our kids,” Boehner said.

Obama is also expected to meet with House Republicans during the week of January 26 to hear their concerns. It has been reported that the president would be willing to accept some tax breaks for businesses, but is not ready to reduce spending.

The House is expected to consider the legislation on January 28 while Senate debate is expected to begin on February 2. House Speaker Nancy Pelosi (D-CA) has said that the bill is on schedule to receive approved before the Presidents Day holiday. Should Congress not pass the legislation by that time, Pelosi said she would keep Congress in session to work on it.

Additional information on the legislation is available at http://appropriations.house.gov/.

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