The $825B & $447B Economic Stimulus Packages

[AeroSim]

I'm starting this thread to track this and prompt for opinions, analysis and result interpretation.

http://online.wsj.com/article/SB123202946622485595.html

It's tempting to call this "The Next Bailout Package"- a chunk is for bailing out troubled states. However, do NOT equate this with the TARP bailout.

It's easy for me to give an off-the-cuff opinion, but I'll refrain for now to try and give it a fair thinking and post later. Actually, I do see some potential for the entrepenuer here...if it's managed right...?

[Dutchcedar]

This might be interesting... a site dedicated to helping citizens read and understand the bill...

http://readthestimulus.org/

[otoc]

Thanks for this.

Highlights of Economic Recovery Plan

Spending

Energy $32 billionFunding for "smart electricity grid" to reduce waste $20 billion +Renewable energy tax cuts and a tax credit for research and development on energy-related work, and a multiyear extension of renewable energy production tax credit $6 billionFunding to weatherize modest-income homes
Science and Technology $10 billionScience facilities $6 billionHigh-speed Internet access for rural and underserved areas
Infrastructure $32 billionTransportation projects $31 billionConstruction and repair of federal buildings and other public infrastructure $19 billionWater projects $10 billionRail and mass transit projects
Education $41 billionGrants to local school districts $79 billionState fiscal relief to prevent cuts in state aid $21 billionSchool modernization
Health Care $39 billionSubsidies to health insurance for unemployed; providing coverage through Medicaid $90 billionHelp to states with Medicaid $20 billionModernization of health-information technology systems $4 billionPreventative care
Taxes

Individuals:

• $500 per worker, $1,000 per couple tax cut for two years, costing about $140 billion
• Greater access to the $1,000-per-child tax credit for the working poor
• Expansion of the earned-income tax credit to include families with three children
• A $2,500 college tuition tax credit
• Repeal of a requirement that a $7,500 first-time homebuyer tax credit be paid back over time

Businesses:

• An infusion of cash into money-losing companies by allowing them to claim tax credits on past profits dating back five years instead of two
• Bonus depreciation for businesses investing in new plants and equipment
• Doubling of the amount small businesses can write off for capital investments and new equipment purchases
• Allowing businesses to claim a tax credit for hiring disconnected youth and veterans

Republicans wasted little time pointing out items they said in no way qualified as emergency stimulus spending, such as $650 million to help television viewers convert from analog to digital. House Minority Leader John Boehner (R., Ohio) took a swipe at several items, including $400 million the plan sets aside for "national treasures," including repairs of the walls of the Tidal Basin near the Jefferson Memorial.

"What we're seeing is disappointing," said Mr. Boehner. The package, he said, "appears to be grounded in the flawed notion that we can simply borrow and spend our way back to prosperity."

But the costly initiative also may split Democrats. Many newer Democratic members of Congress hail from conservative areas and are deeply concerned about fiscal discipline.

Recognizing the political pitfalls, Democrats announced an unusual series of spending safeguards for the plan. Governors and mayors will have to personally certify that every expenditure under their jurisdiction is appropriate. Program managers will be listed online so the public can hold them accountable. A special board will monitor the plan's operation.

A few thoughts. First, this is going to be a test, not only of the new president, but of both parties. This is a work in process.

I'm certainly happy that the Republicans are now reverting back to fiscal responsibility after so many years of projecting deficit spending as good and nothing to worry about.

I'm also happy that Democrats are saying that safeguards are needed.

I'm hopeful that the media will actually get on board and do the job they are supposed to do for this will be a complicated thing to watch and understand. Their job (and to that note, a decent job by the WSJ) is to list, report, and inform.

As I'm looking forward, I can't help but look back at past initiatives such as the Bush tax breaks. A frequent observation was that it wasn't enough. My observation was that the success of that program wasn't due to tax breaks, it was a simple trickle up caused by lowered mortgage rates causing an influx of refi dollars into the economy that far surpassed any tax savings.

But that had an obvious cost and really never was addressed as either a contributing factor or political discussion regarding how successful small tax breaks to focused classes actually are.

Let's hope that the discussions and program benchmarks and report card continue.

[AeroSim]

This might be interesting... a site dedicated to helping citizens read and understand the bill...

http://readthestimulus.org/

Excellent find, Dutch. Thanks also for some summary otoc.

Here is the current text of the proposed bill(per above link):

http://kithbridge.com/RecoveryBill01-15-09.pdf (need Adobe Reader or equiv.)

http://kithbridge.com/RecoveryBill01-15-09.txt (text file if necessary)

[Dutchcedar]

When our government spends $2750.00 for every man woman and child in the country, on such a broad list of things, there's sure to be some benefit perceived by just about everyone. Our household, for example, can find hope in the $6 billion that will be spent on bringing better broadband connectivity to the masses. Being sceptical, we're aware that there's no guarantee that forested communities in the Sierra will be on the list. And being realistic, we probably would not invest our contribution ($8,250.00) to stick a satellite dish and ladder onto a 150' tall tree. Rumor has it that the cable folks are slowly but surely working their way up the mountain anyways.

The above may sound selfish, but that's the rub... its the only part of this collection of campaign promises disguised as a stimulus package that we see as being a direct benefit to our household. Maybe there are other nuggets that will show up to our benefit.

Having the feds toss uncollected, borrowed tax dollars at the State of California might trickle down to our little household in some form of benefit. But again, scepticism chimes in. California legislators have a history of growing government every time they find another money source and there's no reason to think differently if this "stimulus" plan hands them a multi-billion dollar check.

At first blush, the "stimulus" package appears to be a vehicle designed to accelerate government growth, justified by morsels tossed out here and there to placate as many people as possible.

We'll have to wait and see, I s'pose... but there's no way in hell I can look at this with optimism. We need a smaller government with fiscal discipline and nothing in this "stimulus" plan appears to be designed to stimulate government frugality in any way, shape or form.

[tucker]

At first blush, the "stimulus" package appears to be a vehicle designed to accelerate government growth, justified by morsels tossed out here and there to placate as many people as possible.

^^^ Agree...



From his speech:

And those of us who manage the public's dollars will be held to account - to spend wisely, reform bad habits, and do our business in the light of day - because only then can we restore the vital trust between a people and their government.

Now that I’ll have to see to believe. I’m going to be looking very carefully at just how much pork is hidden in this so-called stimulus package. I suspect it will be business as usual on Capitol Hill.

[kbohip]

At first blush, the "stimulus" package appears to be a vehicle designed to accelerate government growth, justified by morsels tossed out here and there to placate as many people as possible.

We need a smaller government with fiscal discipline and nothing in this "stimulus" plan appears to be designed to stimulate government frugality in any way, shape or form.

Which is exactly what it is. There will NEVER be smaller government as long as the Dems and Repubs are in the house. The only "Change" we'll see under Obama is more government in our lives.

[jimzinsocal]

Good thread. Important enough to separate from the more generic thread.

[ablaca66]

Greater access to the $1,000-per-child tax credit for the working poor

????????????????????????????????????????

[jimzinsocal]

For our reading pleasure...

http://blog.heritage.org/2009/01/21/...ulus-skeptics/

Harvard University economics professor Greg Mankiw:

My advice to Team Obama: Do not be intellectually bound by the textbook Keynesian model. Be prepared to recognize that the world is vastly more complicated than the one we describe in econ 101. In particular, empirical studies that do not impose the restrictions of Keynesian theory suggest that you might get more bang for the buck with tax cuts than spending hikes.

[ablaca66]

Is the per child tax offset credit going to turn into a welfare check now? Am I missing something?

[smoked trout]

At first glance that's what it sure sounds like.

[jimzinsocal]

My take as well. Its been my objection all along with Obama's "cash back" deal. Sounds just like the stimulus deal last summer. That was basically worthless.
If the objective is to change tax rates? Then change them. Or any part of the code.
Dont make it so confused and muddy.

[ablaca66]

Allowing businesses to claim a tax credit for hiring disconnected youth and veterans

This is too pc for me.

Edit:

Google is your friend. Apparently I qualified as disconnected youth back when nobody gave a crap about that.

[jimzinsocal]

^^Vets? Works for me.
Disconnected Youths? What does that mean? A bonus for hiring high school dropouts that moved away from home?
Wouldnt it make better sense to encourage hiring workers that lost jobs
due to plant closings and the like?