The economic stimulus package – will it help?

 

Last week, House Democrats and Republicans worked out a deal on an economic stimulus package for $150 billion in hopes of slowing the recession into which most economic experts say we are heading.

President Bush said, “The incentives in this package will lead to higher consumer spending and increased business investment this year.”

The $150 billion package would include rebates for 116 million individuals who file tax returns, including people who don’t make enough money to pay income taxes, and $50 billion in temporary tax breaks for businesses.

 

The rebates would range from $300 to $600 per individual, or $600 to $1,200 per couple, depending on their income level.

The rebates phase out completely for individuals making more than $75,000, and couples making more than $150,000.

House Speaker Nancy Pelosi, D-Calif., said, the stimulus package achieves “putting money in the hands of America’s working families.” She went on to say that the working families are the people “who need the money and will spend the money.”

Some of the other items included in the stimulus package would allow businesses to write off 50 percent of capital investments in the year the equipment is placed in service. Small businesses could immediately expense $250,000 of equipment purchases, doubling the current Section 179 expensing limit.

 

House Minority Leader John Boehner, R-Ohio, said the tax breaks “will give businesses incentives to create and build new jobs in our country.”

The stimulus package also speaks to the housing crisis by increasing the size of mortgages insured by the Federal Housing Administration from $362,000 to $725,000. And, it raises the limit on the size of mortgages that can be purchased by Fannie Mae and Freddie Mac from $417,000 to $625,000.

The House Democrats lost their fight to include expanded unemployment benefits and more money for food stamp programs in the stimulus package.

Sounds good, but is it enough, and will it work?

 

Michael Bloomberg has this to say about the package: “There’s just one problem: It’s not going to make much of a difference because we’ve already been running huge deficits …”

Bloomberg went on to say, “If we spend all the money right now, and there is no recovery because of it, then we don’t have a second hand to play.”

Robert Greenstein, executive director of the Center for Budget and Public Priorities said, “The business tax cuts could lead 35 states to lose $4 billion in tax revenue because of linkages between federal and state tax codes, and it would compel states to slash services or increase taxes, either of which would “act as a drag on the economy.”

 

Greenstein also said that an extension of unemployment benefits and an increase in food stamp programs are two of the most effective ways to stimulate our economy.

The House stimulus package that has been agreed to by both the Republicans and the Democrats now will go to the Senate, where Majority leader Harry Reid, D-Nev., and the rest of the Senate will work on their version of a stimulus package.

Sen. Reid said the Senate hopes to have a stimulus package passed by Feb. 18. Treasury Secretary Henry Paulson said, “Within roughly 60 days (after enactment) more or less, we will be able to begin making payments.”

 

Economic experts across the country have mixed opinions on whether the stimulus package will have any impact on the recession; some say it’s too little too late, while others say it may help.

Maybe it will help – I hope it does – but, to me, it sounds like we are sticking a finger in the dike.

But when I do receive my check, I will be a responsible American and spend it in hopes of stimulating our economy.