Haley Edwards at the Columbia Journalism Review points out a big part of why the Senate version of stimulus bill was more expensive than the House version and so "needed" to be cut back by scrapping projects to build schools and so on. The House version didn't include the standard annual modification of the Alternative Minimum Tax, and the Senate version does.
But why, you might ask, is the Senate package so much more expensive than the House bill?
It’s got much to do with a single $64 billion tax cut benefitting the wealthiest 20 percent of Americans—a fact that was largely buried in reporting about the squabbling over which spending programs to cut.
Haley adds, "that’s one of the reasons why the House’s stimulus measure seemed to be $80 billion dollars cheaper than the Senate’s. It was really only about $30 billion cheaper—after you subtract the $64 billion revenue loss that happens every year when lawmakers curtail the scope of the AMT."
This raises an interesting question. Why is the usual AMT alteration being shoved through by the Senate as part of the stimulus package? Back on January 28 the Wall Street Journal noted:
The Obama administration indicated it would agree to a $69 billion Senate proposal to shield tens of millions of middle-income Americans from the so-called alternative minimum tax, a priority of Iowa Sen. Charles Grassley, the top-ranking Republican on the Senate Finance Committee. The panel later folded the change into the Senate bill.
Although it is standard in the tradmed to say that the AMT benefits "millions of middle-income Americans," it is to put it mildly stretching things to put it that way. Haley points to a study at the Tax Policy Institute which shows that slashing the AMT increases the incomes of Americans in the top quintile by 1.3%, Americans in the next-highest quintile by .7%, the middle quintile by .1%, and does nothing at all for Americans in the bottom 40% of incomes.
To put that another way, Americans in the middle 20% of incomes will get on average a whopping $52 because of Senator Grassley's demand, those in the second-highest 1/5th will get $502, while Americans in the top 1/5th of incomes will get an average $2,593 -- and that last one includes those in the top 5%, who will get an average of $4,511. This is what the WSJ calls "shielding millions of middle-income Americans from the so-called alternative minimum tax."
And that is why school building projects have to be scrapped.