Stimulus Watch
Here is a breakdown of where the $825 billion is slated to be spent, as it stands today:
$358 billion approved by the House Appropriations Committee for construction projects and for investment in education and food aid.
$367 billion approved by the Ways and Means Committee for:
- $275 billion in temporary tax cuts for workers, tax incentives to produce renewable energy, and breaks for builders and other companies that would be allowed to write off current losses against five previous tax years.
- $48 billion to help unemployed people keep their health insurance and to invest in health information technology.
- $46 billion for expanded unemployment benefits and aid to needy families and child support.
$100 billion approved by the House Energy and Commerce Committee for money to improve broadband Internet access and to invest more in clean energy and energy efficiency. It also has about $87 billion to help states pay increasing Medicaid health insurance costs for the poor.
Much of the criticism we’re hearing, especially from our side, is that the stimulus package doesn’t do much in the way of stimulating our lethargic economy– at least not in the short term. The CBO reported the other day that only about $136 billion of the $355 billion to be spent on infrastructure and other discretionary programs will be spent by October 1, 2010. Boehner is criticizing the plan for not providing enough in the way of immediate tax cuts, and for focusing too much on big government projects.
I’m glad that the big government projects being proposed won’t be completed too quickly. Anytime the government tries a quick fix, it becomes an even larger recipe for disaster. I want my infrastructure upgrades, but I don’t want them going through without first giving our bureaucrats the chance to think them over once or twice.
As far as this plan’s immedidate stimulating effect– Boehner is right; this won’t have as much of an immediate impact in stimulating the economy as deeper, quicker tax cuts would. Thankfully, the plan doesn’t seem aimed at just turning the economy around in the short term. The upgrades in broadband access, in energy efficiency, in modernizing how we track healthcare records, and in some of the other proposed measures, are aimed at what’s best in the long-term. I think the GOP realizes this, but feels obligated to put up some sort of idealogical fight, just so it doesn’t look like they’re completely rolling over. Expect this plan to be passed with only minor tweaking.
Thanks for laying out all the various pieces. I understand that our party doesn’t have much to stand on as far as proposals and new ideas right now, but I for one am glad that the proposal is not a “flash in the pan” that implodes and provides a quick fix. We need a mix of short and long term solutions in order to lessen the chance of things getting this bad again. Just like with an investment, infrastructure investments will pay for themselves many times over.
David S.
I heard an independent economist speak yesterday on the combination of spending and tax cuts contained in this package. He said that while spending as a stimulus has been tried, and cutting taxes has been tried, this is the first time that the combination, in one large package, has been attempted. He predicted that the combination would be successful.
He also pointed out that the tax cuts contained in Obama’s package are geared to the middle class down, and to small businesses, thereby giving these people more disposable income to purchase goods, instead of merely increasing the corporate and personal wealth of those who are not as likey to spend the extra money on a regular basis.
Of course, I paraphrased all of this, but that’s the gist of what was said. His thought was that most things in the package are geared to, in various ways, directly inject money into the system, which is sorely needed right now.
That’s one argument that I always buy– that extra money in the hands of low and middle-income people does more to stimulate the economy. Not only are wealthier people just likely to save extra funds they may receive, but they also are more likely to invest or spend it outside of the U.S.
Good point, John, and it follows common sense. If you give a family making 30K a year $1,000, it is like hitting the lottery, and they are likely to do things they wouldn’t normally do, such as splurge on an item they wanted but could never afford, put a downpayment on a new or used car, buy steak instead of hamburger, etc. If you put the same stimulus money into the hands of a family making $150K a year, it is barely a blip on their radar, and won’t impact their behavior at all. It would be like the rest of us finding a $10 bill on the ground. Nice, but far from a game changer.
Even more important David, as I see it, are the tax cuts that will go to the middle and lower classes. An extra twenty bucks a week or so will regularly be spent on groceries, at WalMart, etc., so it will be a constant infusion into the economy by millions of people.
I am hoping that my company is eligible for some of those benefits. We are making some developments in alternative fuel technology, so naturally I want to see this legislation put through.
I also think that there are smaller companies like the one I work for, that can make incredible advances in fuel efficiency, hybrid and alternative fuel technologies that could revolutionize the market. It’s a good investment for America, like NASA.