Tom McClintock votes for $2.2 trillion stimulus package ‘despite all its flaws’

Rep. Tom McClintock has big qualms about the $2.2 trillion economic plan that passed the House Friday, warning it’s inefficient, flawed and could badly “destabilize the fiscal structure of our federal government.”

But like conservatives, liberals and everyone in between, he supported the plan Friday, which passed by a voice vote. “Despite all its flaws, passage of this bill is therefore imperative,” he told House colleagues.

McClintock, R-Elk Grove, has long been critical of what he sees as runaway government spending. He’s been particularly vocal since the coronavirus outbreak began.

He was one of 40 House members to vote against the stimulus plan approved two weeks ago. Earlier this week, he renewed his call for giving people the choice of taking a payroll tax cut in exchange for a brief delay in receiving full Social Security benefits as an alternative form of immediate economic stimulus.

Friday, he maintained his view that government is facing financial peril with the latest economic aid legislation.

“The unprecedented spending in this bill threatens to destabilize the fiscal structure of our federal government and suppress future economic growth,” he said in a House floor speech.

But, he added, to deal with those issues, “We must first arrest the damage caused by the actions that have plunged us into a recession.”

Temporary job losses, McClintock warned, will soon become permanent job losses “without federally guaranteed loans to preserve those jobs and a way for families to recoup their financial losses.”

McClintock lamented “This bill does so, although inefficiently and at enormous cost. Despite all its flaws, passage of this bill is therefore imperative. But it is no substitute for getting Americans back to work.

The House approved the package one day after the Bureau of Labor Statistics reported that a record 3.3 million Americans had filed for unemployment benefits in the past week. Entire industries have ground to a halt as people change their habits to slow the spread of coronavirus.

The bill provides several incentives for businesses, notably a $350 billion forgivable loan program to help small businesses maintain their operations and $500 billion in federal loans for companies, states and municipalities.

It also will provide cash payments of $1,200 per adult and $500 per child to individuals who earned $75,000 or less and joint filers who made $150,000 or less. If they filed their 2019 tax returns, that income will be used as the qualifier. If not, qualifying income will come from 2018 returns.

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Unemployed workers will be able to get an additional $600 per week for four months, in addition to state benefits, which in California are a maximum of $450 per week. State benefits, now limited to 26 weeks, could grow to 36 weeks.

One of McClintock’s proposals to boost the economy would be to cut the payroll tax this year in exchange for a slight delay in the Social Security retirement age.

People wouldn’t have to do it, and the retirement age postponement would probably last only a month or so, he says.

It incorporates a broader idea endorsed by President Donald Trump, who wants to cut the payroll tax, with another that’s been discussed and often endorsed by Democrats and Republicans, raising the age for full Social Security.

Currently, workers pay 6.2% of their income in Social Security taxes until their income reaches $137,700. Most also pay another 1.45% in Medicare tax with no income limit. Employers match the contributions.

When Social Security was created in 1935, the retirement age was 65. A 1983 reform provided a gradual increase to 67 for people born in 1960 or later.

“For struggling families, a payroll tax holiday could quickly boost incomes through the end of the year, maximizing the incentive for businesses to reopen and individuals to return to work,” McClintock said.

Several proposals have surfaced in Congress in recent years, and the Bipartisan Policy Center has suggested raising the age for full benefits by one month every two years until it eventually reaches 69.

McClintock’s idea is so far a longshot in the current effort to ease the economic strain. But the concept is being discussed in Congress and in Washington’s think tanks.

“It may be time to raise Social Security’s retirement age, because people are living longer,” said Richard Johnson, director of the nonpartisan Urban Institute’s Program on Retirement Policy.

But, he added, “I worry about giving workers a payroll tax holiday today, because it would worsen Social Security’s already shaky finances.”

Shai Akabas, director of economic policy at the Bipartisan Policy Center in Washington, did not see the McClintock idea as the right approach.

“In the economic downturn that has already hit millions of Americans, I don’t think it’s right to ask them to trade off their future retirement security in order to make ends meet right now. This is essentially robbing Peter to pay Paul, where Peter is your future self,” he said.