Stimulus 101: What's in the Bills--by David Goldman

Stimulus 101: What's in the Bills--by David Goldman

http://finance.yahoo.com/banking-budgeting/article/106490/Stimulus-101-What's-in-the-Bills

HR-1, the American Recovery and Reinvestment Act bill is the most unprecedented sum of money America has ever used to not only revive the economy but towards any program in America’s history. President Barack Obama and his economic team are really trying to find ways to stimulate the economy in this quote unquote recession we are facing. However President Barack Obama and House Democrats rolled out an economic stimulus package of $825 billion dollars to not only the American public but to House Republicans and the entire GOP. While many House Republicans and GOP leaders have rebuffed the original package presented to them because it had no GOP input whatsoever, it is apparent that even that many GOP members bring up great points regarding the $825 billion dollar stimulus package or economic recovery plan.

While President Obama should be commended for not only reaching out to House Republicans and GOP leaders but for meeting with them personally, although many of them disagreed with his $825 billion dollar stimulus proposal. Nonetheless, President Obama left that meeting on January 27 saying that he is willing to compromise on his billion dollar stimulus proposal. Many GOP leaders have even said the meeting was very productive and look forward to their ideas being a part of this economic stimulus package.

Despite President Obama leaving the meeting saying it is willing to compromise, he criticized many politicians of playing politics in a time when politics is not needed. Therefore many in the news media can assume that President Obama was referring to GOP members but I am going to give President Obama the benefit of the doubt and say that he was talking about his own party as well. As the House hearing on HR-1 transpired on January 28, all you could see was partisanship from House Democrats. The more the hearings were aired on C-SPAN, it was clear that House Democrats did not have the same sentiments their beloved leader President Obama.

In fact, many House Democrats just want the proposed $825 billion dollar economic stimulus package to just go through without any House Republican input whatsoever. President Obama is right that this is no time for politics but it is time for real thoughtful solutions and not just speedy passage of any bill. America can’t afford to waste time that’s why both Democrats and Republicans need to work together to bring about a positive economic stimulus package that will work for all Americans and not just a few Americans.

However while many Americans want a quick and fast economic stimulus package passed, we can’t afford an economic stimulus package passed too fast without proper oversight and insight being put into the plan thoughtfully and strategically. How soon do many us forget that we passed the TARP bill this summer too fast and now we don’t even know where the first half of that $700 billion dollar plan to the banks even went, yet alone, the banks have not even told us how they spent it whatsoever after being asked by many media outlets. Therefore we need to properly send much of this $825 billion dollar economic stimulus package through the proper chain of commands such as committees where debate can only help flourish and polish the economic stimulus package.

If politics are properly put to the side by both House Democrats and Republicans than both parties and sides can get what they want out of the deal. For example, Republicans are advocating for less spending and more tax relief but the Democrats are not willing to budge on this issue and would rather submit a separate tax relief plan in a later bill. It is bad enough that the current $825 billion dollar economic stimulus package is filled with hundreds of thousands of pages of legislation that all 435 house members must have a copy of. So if we are talking about fiscal responsibility in a time of a recession than why have we already spent nearly $1 billion on making copies of this nearly 650 page bill for House members and media outlets?

Right now the $825 billion dollar economic stimulus package as it sits will not revive our economy unless we really think carefully about how this money is spent and implemented into our economy carefully. While I commend President Obama for creating the www.recovery.gov website as a resource or tool for many Americans to see how the stimulus package money will be used, it is not enough. What we as Americans need is for more tax cuts for small businesses and the American people as well as rewriting the TARP legislation in order to recover the American tax payer $350 billion dollars used by the banks from August to now where many banks don’t know what they did with it. What we as Americans need is for some of this billionaire dollar companies that we acquired or saw tax payer dollars go into such as Fannie Mae, Freddie Mac, AIG, Merrill Lynch, etc. to give us our money back and for our government to lock up many of these former as well as current CEO’s and board members.

GOP House members are right when they say that spending is not stimulative because that is the same ideology as the Bush administration back last winter when they wanted to give the American people stimulus checks in hopes that we the American people will spend more. Nonetheless, many Americans want more stimulus checks but not simply handouts but in the form of tax cuts. The $825 billion dollar economic stimulus package won’t have a quick impact and it is not enough of a relief in my opinion. However we have to do something but we need to do it in the right way. We need to do it together as Americans, not as Democrats and Republicans but as Americans.

We can’t simply throw money at the problem as we have done in the past but we need to invest in what works but we don’t know if any of what we are proposing will work. So that’s why we can’t simply dull out a $825 billion dollar economic stimulus package without properly looking at what works and what doesn’t work because none of the ideas in the bill are rather done. Many of the initiatives that are in the $825 billion dollar economic stimulus package are not new whatsoever but are the same old rhetoric from previous decades. If we carefully look at the last 30-40 years of America’s economic system than we will find out that both Democrats and Republicans in the House and Senate are proposing ideas that we have applied to our economy already. Some of which has worked and some of which hasn’t.

That’s why it doesn’t take a rocket scientist to look at the $825 billion economic stimulus package and find what in the bill is good and what isn’t. The only way this can happen is by having more than one committee meeting in the Appropriations Committee and Ways & Means Committee. While swift action needs to be taken to improve our economy, we can’t do it too fast that proper discussion and debate doesn’t take place as well as good sound ideas aren’t put into this $825 billion economic stimulus package. Democrats need to follow their leader President Barack Obama and listen to GOP leaders in order to find compromise on this HR-1 bill. If House Democrats want the bill to pass with bi-partisan than they need to come off their high horse and stop trying push through the same old policies that they haven’t been able to get through Congress in previous decades and look to only put in good sound proven policies that will truly help our economy.

The American Recovery and Renewal Act is not enough and deals with too many things that it won’t properly succeed the way it should succeed because each issue within the bill will have to come back to the House and Senate separately in order to get more money for many of the programs within this bill. The act is too large and really doesn’t give enough to things such as small business development, state relief, education, healthcare, and alternative energy. So for those who look at the amount of the bill, we will expect for it to work but the reality is that it is only a small chuck of what is really needed for America’s economy to be revived. In fact we are under investing with this act and will only cause more harm than good with these short term small chuck attack.

No matter how one looks at the American Recovery and Renewal Act, it is clear that it is partisan effort where President Obama is trying to be a mediator that brings both Democrats and Republicans together. Nonetheless President Obama is commended for his efforts for trying to sell the $825 billion economic stimulus package especially during his news conference on January 28 before the House voted for the act where he stated that “Business, not government, is the engine of growth.” While business not government is the key to growth, but many big businesses have failed us the American people and that’s why more small business relief needs to be implemented into this plan.

America’s economy will not recovery until we deal with the amount of jobs being lost in this country and the home foreclosure issue. America economy will take time to bounce back but the American Recovery and Renewal Act is too broad and not specific enough in dealing with each issue addressed in it properly. While the stimulus package is large enough in size, it isn’t large enough in being very specific in addressing all the needs it covers and it isn’t large enough to properly address all the issues it addresses in a way that is sufficient and efficient. So if you properly look at the merits of the American Recovery and Renewal Act, you will quickly respect it and appreciate President Barack Obama as well as economic team and House Democrats efforts.

But at the same time, you probably would appreciate the act even more if it was broken up into separate acts and if the amount of money shelled toward each issue was increased more. America can’t recover with simply shelling out amounts of cash here and there but we need to properly concentrate our efforts more specifically on the issues that the American Recovery and Renewal Act aims to do. While shelling out $142 billion dollars in Education might be a lot of money to sum, it is actually not enough to properly do what President Obama is proposing to do too many schools in America. President Obama, his economic team and House Democrats want to rebuild thousands of schools by modernizing classrooms, labs and libraries and would also increase funding for Pell Grants. If you really look at all of that in its entirety, you will understand that perhaps $500-800 billion dollars are needed to properly modernize thousands of schools in America and to increase Pell Grants for many would be and current college students in America. That’s why this $825 billion dollar economic plan is a good proposal in merit but it would be more sufficient and efficient if each component was broken up into separate acts of legislation and given the proper funding to do so.

However to read more about President Obama’s and the House Democrats economic stimulus package, you can read the following article below from www.cnnmoney.com, where it points out the pros and cons of the major issues involved in the legislation. After reading the article, you will understand how this piece of legislation is not a enough but simply a snack that won’t fully fulfill the hunger of America’s economy.


Tuesday, January 27, 2009 provided by CNNMONEY.com

The plan by Obama and congressional Democrats to revive the economy is taking shape. Here's what we know so far.

You've probably noticed: The Obama administration and Congress are talking about spending an unprecedented sum of money to try to revive the economy.

President Obama and House Democrats laid down the marker with an $825 billion package of spending and tax cuts.

Dozens of proposals. Hundreds of pages of legislation. Billions of dollars.

What are some of the headline proposals, and what is the debate all about? The legislation is a work in progress, but here is an overview.

Infrastructure
The case for: By investing in renewable energy, health care, education and modern construction projects, the Obama administration expects to create between 3 million and 4 million jobs and address key sustainability issues.

The case against: Opponents argue the spending will lead to a rapidly increasing and unsustainable deficit. They also say that a majority of infrastructure projects will take too long to implement.

Construction projects: $90 billion. Fund the rebuilding of crumbling roads and bridges, build clean water and flood control mechanisms and provide funding for mass transit systems.

Education: $142 billion. Rebuild thousands of schools by modernizing classrooms, labs and libraries. The plan would also increase funding for Pell Grants.

Renewable energy: $54 billion. Double production of alternative energy in the next three years. Weatherize low-income homes, modernize 75% of federal buildings and update the nation's electrical grid with a new, cost-efficient "smart" grid.

Health care records: $20 billion. Modernize the health care system by computerizing all of the nations' medical records in the next five years.

Science, research and technology: $16 billion. Invest in science facilities, research and instrumentation to create new industries, new jobs and medical breakthroughs. Expand broadband Internet access in rural and underserved areas.

State Relief
The case for: As states face budget shortfalls, Obama's plan seeks to help states pay for Medicaid and unemployment benefits. State fiscal relief will be allocated to prevent increases in state and local taxes.

The case against: Opponents say the bill should focus on job creation that will make an immediate impact on the economy. Republicans have specifically criticized a provision that would expand a government matching program for states that provide abortion and contraceptive funding through Medicaid. A Democratic official told CNN the House Democratic leaders are planning to remove the provision.

Medicaid: $87 billion. Increase Federal Medicaid Assistance Percentage so states do not have to cut eligibility for Medicaid due to budget shortfalls.

Law enforcement: $4 billion for states and municipality funding for law enforcement.

Safety Net
The case for: Obama proposed temporary programs to protect those most vulnerable to the effects of the recession.

The case against: As with state budget relief, opponents say the bill is too big and should simply aim to create new jobs. Some lawmakers have said some of the "safety net" spending provisions are wasteful, and many have called the bill unfocused.

Unemployment benefits: $43 billion. Extend through December 2009 emergency unemployment insurance assistance to states. Increase weekly unemployment benefits by $25, and provide incentives for states to expand unemployment coverage.

Cobra: $39 billion. Tax credit for recently laid-off employees to help pay for discounted health care. Obama estimates the plan will help 8.5 million people who recently lost their jobs.

Feeding the hungry: $20 billion. Increase food stamp benefits by 13%, and provide support for food banks, school lunch programs and WIC.

Tax Cuts for Individuals
The case for: The president proposed the so-called "Make Work Pay Credit" as part of an effort to spend at least 75% of the package in the first 18 months after its passage. Obama hopes that fast-spending provisions like tax cuts will quickly help low- and middle-income workers in need of spending money.

The case against: Opponents say the size tax cuts do not go far enough and on the whole don't make up a big enough portion of the entire package. Furthermore, they oppose giving tax breaks to people who do not pay taxes.

Middle-class tax cut: $145 billion. Tax cut amounting to $500 a year for individuals and $1,000 for couples. The full credit would be limited to those making $75,000 or less ($150,000 or less for workers filing joint returns).

Low-income tax cut: $5 billion. Expand the Earned Income Tax Credit, which is a refundable credit for low-income workers. Furthermore, the Make Work Pay Credit would be refundable, meaning that even tax filers without any tax liability -- typically very low-income workers -- would receive one.

Child tax credit: $18 billion. Temporary increase in the amount of the child tax credit that would be refundable.

Tax Cuts for Businesses
The case for: In an attempt to get money out quickly to low- and middle-income workers, the president has pushed for tax cuts for certain individuals.

The case against: Opponents say too small of a percentage of the total package -- 2.7% -- goes to small businesses. They also say that much of the proposed tax relief essentially amounts to spending, due to the provisions Democrats placed on the tax credits.

Small business write-offs: Obama would increase the amount of expenses small businesses can write off to $250,000 in 2009 and 2010 from the current $125,000 level.

Tax cuts for companies suffering losses: $17 billion over 10 years. Obama would temporarily broaden the "net-operating loss carryback" to five years, up from two years currently. The provision would let companies apply their 2008 and 2009 losses to past and future tax bills so they can get money back on taxes they've already paid or would otherwise have to pay.

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