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Your stimulus package has arrived

Bottom Line
By Marvin Bionat

A rider in the recently approved stimulus package is the authorization to release $198 million to benefit Filipino veterans who served under the U.S. during World War II. In a TV interview, Republican Senator Jon Kyl from Mississippi criticized the inclusion: "There are so many different things that you can make fun in this bill. Let me just mention one—millions of dollars to World War II Filipino veterans in the Philippines. Now, that may be a good thing to spend money on, but not in a stimulus bill. It doesn't stimulate anything."

What Senator Kyl failed to realize is that the $198 million was actually already appropriated last year, so it won't come out of the stimulus package. So why was the rider included in the final version of the bill? Long-time supporter of Filipino veterans Senator Daniel Inouye, who happens to be the chairman of the Senate Appropriations Committee, said that "it will close a dark chapter in the history of this country," referring to America's failure to keep a promise to hundreds of thousands of Filipinos, who fought for the U.S. during World War II, that after the war they would qualify for full veterans benefits.

There are an estimated 18,000 Filipino veterans expected to benefit from the signing of the bill—6,000 of whom are in the U.S., while the rest are in the Philippines. Those in the U.S. will receive a lump sum of $15,000, while Philippine-based veterans will get $9,000. In an ideal world, Filipino veterans should have received full monthly benefits (and get what's due them retroactively), so the proposed lump sums are a pittance, but under the dark shadow of a major recession the release of the funds has been generally hailed as an achievement. The average age of a Filipino veteran is 90, and the U.S. is clearly struggling to fund just the basic governmental programs and obligations, so there has been an understandable let's-get-what-we-can urgency in the veterans' equity lobby.

Senator Kyl's critique typifies the partisan nature of the Republican response to the stimulus package crafted largely by the Democrats. Not a single Republican member of the House of Representatives voted in favor of the bill. In the Senate, only three Republicans voted for it. The voting appeared to be driven by the same old partisan politics, but in an interview, senior Obama adviser David Axelrod displayed patience (calculated civility perhaps) by acknowledging differences in points of view between the two parties; that is, the Republican reliance on tax cuts and what seems to be their repudiation of Keynesian approach to fighting recessions.

If it is true that FDR got the country out of the Depression because of government spending in infrastructure and social welfare, then overall the stimulus package should have a positive effect. The mind-set among Republicans, however, is that only their idea of economic recovery will work and that America was wrong in electing Obama. As a result, they seem poised to spend the next four years lambasting the Obama administration every chance they get. I suppose that's why they're called politicians, not statesmen. With the Democrats controlling Congress, there is less need for statesmen or at least mavericks from the other side of the aisle. And Obama is expected to bring his case to the American people, which will only be a bane for the Republican party, who will ultimately appear to be obstructionists, especially if the economy improves as a result of largely Democratic efforts.

The total resources allotted to salvage the U.S. economy so far is around $1.5 trillion ($787 billion recently approved plus the $700 billion for the troubled assets relief program or TARP approved by Bush before Obama took office). That seems huge, but the general consensus among prominent economists (including 2008 Nobel laureate Paul Krugman) is that stimulating the economy out of this serious recession requires an even greater infusion; the range being bandied about is $2-3 trillion. With 75 percent of the recently approved stimulus package expected to be spent in the first 18 months and the more immediate release of the remaining $350 billion under TARP, it is hoped that the buds of recovery will start to sprout perhaps as soon as later this year or early next year. There is, however, a big unknown in the economic recovery issue: the true and full extent of the havoc wrecked by the sub-prime mortgage crisis. Even at this time it is not clear how much damage has been done and whether banks being helped through TARP will actually remain solvent.

The Democrats will probably play it by ear in the coming months, hoping hard that they won't need to push for another stimulus package and go up to the $2-3 trillion or an even higher range. That will bring the national debt to GDP ratio to more than 80 percent, not seen since the post-war spending hit more than 120 percent. Back then America recovered nicely, mainly because entire industries were in a strong growth cycle, and domestic and foreign markets were wide open for American products. Now, aside perhaps from a potential green technology boom, there's seems to be a scarcity of industries to drive economic growth, and foreign markets are harder to crack due to fierce global competition. Clearly, the economic imperative for America (aside from simply surviving the seizure that the sub-prime mortgage crisis triggered) is to take a strong lead in scientific and product innovation (be it in green technology, bioscience, medical research, etc.) that will create jobs at home and capture markets abroad.

The Obama administration did make a strong policy statement along that line by insisting that investments in green technology, scientific research, and innovation be included in the stimulus package. Provisions that made it through include at least $6 billion in loan guarantees for renewable energy projects and tax breaks or grants for wind and solar energy investments, $2 billion for research in batteries for electric cars, and $15 billion for scientific research mainly at U.S. universities. Overall spending on higher education is expected to top $32 billion. The Republicans call the investments pork and would rather see more tax breaks for the rich.
Marvin Bionat is the creator of PhilippineUpdate.com, a news and views site that has served as a virtual platform that promotes various advocacies, including the political empowerment of overseas Filipinos and accountability in government. He wrote the National Bookstore bestseller How to Win (or Lose) in Philippine Elections (Anvil Publishing, 1998) and is now based in the U.S. working as an editor.

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