"On November 15, 2008, President-elect Barack Obama announced during his weekly radio address that the nation was facing '...the greatest economic challenge of our time 'and that he would work with Congress to design a two-year economic recovery plan with the goal of creating 2 million jobs '...rebuilding our crumbling roads, bridges, and schools.' As negotiations progressed, national unemployment figures jumped to a fifteen-year high of 6.8% for November 2008 and continued to increase, reaching 7.2% for December 2008. In light of the poor economic news, President-elect Obama increased his economic recovery plan's job creation goal, first to 2.5 million jobs over two years and later to 3 million jobs. In mid-December, President-elect Obama presented congressional Democrats a proposal to dedicate $675 billion to $775 billion over the next two years to middle-class tax cuts, aid to state governments and investments in infrastructure, health-care technology, and education. On January 15, 2009, House Democratic leaders released their economic recovery proposal. It would dedicate $825 billion over the next two years for tax cuts targeted to the middle class and business ($275 billion) and increased spending on infrastructure, health-care, education and aid to state governments ($550 billion). This report examines arguments presented by the National Conference of State Legislatures (NCSL) and the National Governors Association (NGA) to include state fiscal assistance in an economic recovery plan, several arguments to exclude state assistance from such a plan, and the implications the proposals presented by NCSL and NGA might have for the economy. It also examines issues related to the targeting of state fiscal assistance and arguments for and against including infrastructure construction projects in an economic recovery plan, and presents key provisions in proposed economic recovery plans that directly affect state and local governments."
CRS Report for Congress, R40112
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