2.27.09 SENATOR SPECTER ON ECONOMIC STIMULUS BILL

Dear Mr. Paine:

Thank you for contacting me regarding the American Recovery and Reinvestment Act (H.R.1, P.L. 111-5). This legislation passed the Senate 60-38 and was signed into law by the President on February 17, 2009. I appreciate you taking the time to share your thoughts with me.

I supported the economic stimulus package for one simple reason: The country could not afford not to take action. The unemployment figures, the latest earnings reports and the continuing crisis in banking made it clear that failure to act would have left the United States facing a far deeper crisis in the future. I carefully weighed the vote on the stimulus package because of the large deficit and the large national debt faced by future generations.

The economy is in a desperate situation. Just in the month of January, 2009 we lost 600,000 jobs, added to the loss of 2.8 million in 2008. There are millions of people who are having their homes foreclosed. The economists tell us that if we do not act that the current severe recession could well develop into a full-fledged depression like 1929. The agreement we reached was the best one we could under the circumstances. We were able to cut out $100 billion from the package. My preference would have been Senator John McCain's proposal, a $421 billion alternative focused largely on income tax reductions and business tax breaks. Unfortunately, this amendment failed 40-57. I voted for the Reagan tax cuts back in 1981 and that would be the best course, but in a legislative body it is important to be able to compromise and pass legislation, as opposed to inaction.

I was impressed with the position of the United States Chamber of Commerce which was for the bill very solidly. The Chamber is for the bill because it supports pro-growth tax initiatives. The Chamber is for the bill because it applauds the inclusion of tax relief. The Chamber is for the bill because many of the spending-side provisions in the legislation will also provide stimulus to get Americans back to work, focusing on infrastructure spending for roads, rails, public transportation, aviation, inland waterways and ports.

Many provisions of the bill affecting small businesses were based on legislation I have introduced in the 111th Congress. The Act delays the 3% withholding tax on payments to businesses that sell goods or services to governments. My bill, S.292, would repeal this withholding tax. For small businesses, the Act extends the Net Operating Loss (NOL) carryback period to five years for 2008. My bill, S.293, which I originally introduced in the 110th Congress, would extend the NOL to five years for 2008 and 2009. The Act also extends two provisions that were enacted as part of the Economic Stimulus Act of 2008, and mirror my bill, S. 294. The 50 percent bonus depreciation and the increased $250,000 limit for the Small Business Expensing Allowance are extended for an additional year.

Thank you for taking the time to bring your views on this important matter to my attention. As a United States Senator, it is essential that I be kept fully informed on the issues of concern to my constituents. Should you have any further questions, please do not hesitate to contact my office or visit my website at http://specter.senate.gov/.
Sincerely,

Arlen Specter