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Dear Friend,
February 17th was the one year anniversary of President Obama signing the American Recovery and Reinvestment Act (ARRA) into law. I strongly supported this measure when it passed the Congress because I believed it would stimulate our economy in the near term, assist working families that are struggling to make ends meet, and help set the stage for long term economic growth. Now, a year later, I’ve tried to do a report card on whether the Recovery Act has been successful and had a positive effect on the 3rd District of Maryland. There are some good stories to tell and there are some places where we can do better.
I’ve been talking with small business owners from all around the district to hear about their experiences in this tough economy; I’ve met with local government officials to discuss how they are accessing the recovery dollars and if they have been able to maintain or improve services as a result of those resources; I’ve been learning how ARRA is and isn’t working so I can make my own evaluation of its success.
The good news is that ARRA is largely doing what it’s supposed to do – it is saving and creating jobs, helping Americans weather the economic storm, funding infrastructure upgrades, improving our schools, and educating our workforce. But I’ve also found there are areas we can improve to deliver results more efficiently and get our economy back on track. I’d like to share with you what I’m learning as I continue to move around the district.
Recovery Act Facts
• $288 billion in tax benefits: this includes the Making Work Pay Tax Credit, First-Time Home Buyer Credit Expansion, and energy efficiency tax incentives. Of the money allocated for this purpose, $92.8 billion has been returned to taxpayers so far.
• $224 billion for Unemployment Insurance and COBRA health benefits to help those who lost their job as a result of the economic crisis, as well as a one-time $250 payment for Social Security recipients and other retirees on fixed incomes
• $275 billion in contracts, grants and loans: this includes infrastructure spending in transit, highways and water infrastructure, education assistance and public safety funding as well as energy funding to help spur new green jobs. Of the money allocated for this purpose, $74.4 billion has been paid out so far.
Recovery Act in Maryland
• The Making Work Pay Tax Credit provides a refundable tax credit of up to $400 for working individuals and up to $800 for married taxpayers filing joint returns in 2009 and 2010. This is anticipated to help 2.1 million Maryland families providing them $1.1 billion worth of tax relief.
• The First Time Homebuyer Credit was expanded to increase the credit to $8,000 for purchases made in 2009 before Dec. 1, and it was subsequently extended to April 30, 2010. The credit applies only to homes used as a taxpayer's principal residence. As of October 2009, more than 8,000 Maryland homebuyers had filed for this credit for more than $60 million in tax relief.
• In Maryland’s Third District, 94,368 recipients of Old-Age (retirement), Survivors, and Disability Insurance (OASDI) qualified for a $250 rebate, totaling more than $23 million. 11,960 Social Security Income (SSI) recipients received a $250 rebate, totaling nearly $3 million.
• $4.6 billion in contracts, grants and loans have been awarded in Maryland; $1.1 billion have been received to date resulting in 6,751 jobs.
Recovery Success Stories
Improving Our Aging Infrastructure – As a result of ARRA, we were able to upgrade many of our state’s roads, highways and transit systems. For example, we invested $7.5 million to resurface Northern Parkway from Falls Road to Park Heights Avenue. This project is currently underway.
• Since the project began in June 2009, five local construction companies have been hired to complete the work.
• Each day about 47 workers arrive on site to make this roadway safer for the community to use.
Helping Local Businesses Expand – By offering tax exemptions for local jurisdictions that issue Recovery Zone Bonds, ARRA leveraged a small amount of money to get large economic development projects back on track.
• In Anne Arundel County, projects worth more than $120 million and resulting in over 500 construction jobs and 1,000 permanent jobs were financed through Recovery Zone Bonds. The projects include the headquarters for a medical device manufacturer in Severna Park; defense related business offices near Fort Meade; and retail and housing centers in Odenton and Hanover.
• In Baltimore City, four projects totaling more than $89 million will result in approximately 480 construction jobs and over 460 permanent jobs once the developments have been completed. The projects include nearly 30,000 square feet of shops in two buildings east and west of the market, an Inn at Penn Station which will convert the vacant upper floors of the train station to a 77 room boutique hotel, and a Curtis Bay laundry facility on Hawkins Point Road consisting of a 60,000 square foot facility which is estimated to be operating by the first quarter of 2011.
• Howard County will use Recovery Zone Bonds to revitalize the Route 1 Corridor.
Training Workers for a New Generation of Jobs – ARRA provided $5 million to train 1,500 individuals for jobs in four different green industries.
• The program will work through a regional partnership with business, community colleges, labor apprenticeship programs and the One-Stop Workforce System.
• It will also improve manufacturing sustainability practices and waste stream management, develop and expand green construction training options and assist workers as they pursue environmental careers.
• Participants will earn certificates or degrees in waste stream management, environmental technology, or renewable energy and green construction.
Recovery Challenges
Small Business Lending
Small business owners have been forced to confront the consequences of the economic crisis head on – stretching reserves to meet payroll and struggling to maintain inventory. Too often, they have been forced into furloughs, layoffs and bankruptcy. The credit freeze that sprung from reckless gambling on Wall Street has made things even more difficult for small businesses to survive the economic downturn.
As I’ve met with small business owners around my District, I was troubled to hear that the Recovery Act loan programs established at the Small Business Administration (SBA) were virtually inaccessible to local businesses in need. For example, the microloan program was designed to help mitigate the credit freeze by providing small loans to start-up, newly established or growing small businesses. Unfortunately, no community-based lenders for microloans have been established in Central Maryland, denying local small businesses access to these loans a full twelve months after the enactment of the ARRA.
In response, I’ve written to SBA Administrator Karen Mills asking her to move quickly to establish lenders in this area that will provide these businesses access to capital as intended under ARRA. My staff is working with SBA officials and local government officials in Baltimore to establish a non-profit intermediary to administer lending in Maryland and get this initiative back on track.
I remain concerned about the impact of the credit crisis on Maryland’s small business sector and will continue to work to correct these problems so that small businesses can lead our economic recovery one job at a time.
Hiring More People
The Recovery Act sought to stimulate the private sector through tax cuts, grants and infrastructure contracts for private businesses. By October 1, 2009, an estimated 20 percent of the Recovery Act’s impact had been felt, by October 1, 2010 that figure will be an estimated 60 percent, and by October 1, 2011 it will be approximately 81 percent. Because a significant portion of that relief came in the form of contracts and grants, it was necessary to balance the speed of delivery with appropriate safeguards against waste and graft. The result is that much of the impact of the Recovery Act is spread over a few years.
The entrepreneurial spirit of the private sector will always be the engine of our economy. Long term growth depends upon the vitality of American businesses and the government is responsible for maintaining the conditions in which businesses can innovate and thrive. But in a recession like the one we are experiencing now, the private sector job market sags and the result is unemployment. The government can and should provide alternatives to the unemployment line. By hiring temporary government employees until the private sector recovers from the trauma inflicted by the recent recession, we can keep people working while making our communities a better place to live.
We can put the unemployed to work meeting the needs of communities across the country. In the spirit of the New Deal, we could clean our cities, parks and roadways. We could renovate schools, police departments and fire stations. We could enhance the security and safety of our nation’s critical infrastructure. Meeting these needs is just a matter of common sense. For those that have a family to feed, these are real opportunities that can make a difference between hope and despair. So why not put people back to work making our country a better place to live? I regret that more was not done in this area in the Recovery Act and I hope the Congress can set aside ideology and agree on a jobs package that involves more direct hiring. It would be as effective as it is simple.
This one-year anniversary of the Recovery Act has given us an opportunity to evaluate our progress on achieving economic recovery. We have been successful in bringing our economy back from the brink of collapse but we know there is still much to be done. I want you to know I am prepared to do whatever it takes to get our economy working for ordinary Americans again. To those of you who have contacted me on this topic, I appreciate and value your input.
Sincerely,
John P. Sarbanes
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