If you look at the specifics of what the 'stimulus package' was intended and allocated for, 500 billion of the 787 billion went to states so they could extend unemployment insurance benefits, food stamps and subsidies for COBRA health insurance benefits for laid-off workers - with only 75 billion of this 500 billion going for actual infrastructure improvements. The other 288 billion was allocated for tax cuts. This is a stop-gag measure and will provide nothing of long term benefit. It was intended to prevent the bottom from falling out sooner rather than later. If there is no job creation (on a net basis), they'll have to do this again and again and again to avoid the consequences they feared when they passed the first stimulus package. In the first weeks of Mr. Obamaâs tenure, he persuaded Congress to approve $787 billion worth of federal spending to stimulate the economy â $288 billion in tax cuts plus $499 billion to aid states and local governments. In crucial ways, this spending has already had an effect, say economists. It extended unemployment benefits and food stamps, while cutting by nearly two-thirds the amount that laid-off workers must pay to retain their health insurance. But whether it revives economic activity remains unknown. The tax cuts are only now being distributed. Only about $75 billion has been dedicated, mostly to public works projects like road-building. âThe moment of truth is coming soon,â says Mr. Zandi. âIf we donât see something real in the data by June, then I get very nervous.â Be prepared to get very nervous, Mr. Zandi. http://www.nytimes.com/2009/05/10/b...e.html?_r=1&hpw
Link wasn't working, but found this from FEB 2009, breakdown of where the stimulus money is going: How the stimulus plan breaks down Updated 2/13/2009 3:56 AM | Many provisions of the nearly $789 billion compromise stimulus plan expire in two years. Additional debt costs would add about $330 billion over 10 years (Story). Highlights: Spending Aid to poor and unemployed â¢$40 billion to provide extended unemployment benefits through Dec. 31, and increase them by $25 a week; $20 billion to increase food-stamp benefits by 14%; $3 billion in temporary welfare payments. Direct cash payments â¢$14 billion to give one-time $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions. Infrastructure â¢$46 billion for transportation projects, including $27 billion for highway and bridge construction and repair; $8.4 billion for mass transit; $8 billion for construction of high-speed railways and $1.3 billion for Amtrak; $4.6 billion for the Army Corps of Engineers; $4 billion for public housing improvements; $6.4 billion for clean- and drinking-water projects; $7 billion to bring broadband Internet service to underserved areas. Health care â¢$21 billion to provide a 60% subsidy of health care insurance premiums for the unemployed under the COBRA program; $87 billion to help states with Medicaid; $19 billion to modernize health information technology systems; $10 billion for health research and construction of National Institutes of Health facilities. State block grants â¢$5 billion in aid to states to use as they please to defray budget cuts. Education â¢$54 billion in state fiscal relief to prevent cuts in state aid to school districts, with up to $10 billion for school repair; $26 billion to school districts to fund special education and the No Child Left Behind law for students in K-12; $17 billion to boost the maximum Pell Grant by $500 to $5,350; $2 billion for Head Start. Homeland security â¢$2.8 billion for homeland security programs, including $1 billion for airport screening equipment. Law enforcement â¢$4 billion in grants to state and local law enforcement to hire officers and purchase equipment. Taxes New tax credit â¢About $115 billion for $400 per-worker, $800 per-couple tax credits in 2009 and 2010. Credit phases out for individuals with adjusted gross incomes of $75,000 to $90,000 and couples with AGI of $150,000 to $190,000. Alternative minimum tax â¢About $70 billion to spare about 24 million taxpayers from being hit with the alternative minimum tax in 2009. The change would save a family of four an average of $2,300. Expanded college credit â¢About $13 billion to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010. The credit is phased out for couples with incomes over $160,000. Home buyer credit â¢$3.7 billion to repeal a requirement that an $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to Aug. 31, unless the home is sold within three years. Bonus depreciation â¢$5 billion to extend a provision allowing businesses buying equipment such as computers to speed up depreciation through 2009. Auto sales â¢$2.5 billion to make sales tax paid on new car purchases tax deductible.
I wish I got some benefit out of Obama's tax cuts. What I don't get is that $250 social security payment. What is that, 1 half of a month of groceries for regular people? Maybe a month over 3 years if you buy 3 years worth of mayonnaise at costco in bulk?
Only the bloated unit of government, and mostly the irresponsible will see any benefits from this graft. I do support the extension of unemployment benefits and COBRA subsidies, however - a lot of very responsible and hard working people lost their jobs partly because their elected representatives sold them down the river. The problem I have with Obama and this legislation is it's anything but stimulative on any even intermediate term basis. It's a temporary patch. What's gong to reinvigorate the economy, grow the job base, and keep this nation from having to continually sell bonds (debt that is being stacked on future generations) in order to finance consumption (at even a modest level, to keep from falling into a depression), when too much consumption relative to productivity and liquidity levels is what got us into our problems in the first place? It's asinine. The government is prescribing the hair of the dog that bit us in the nut sack.
What they need to do is abolish the income tax. That's your stimulus right there, and it's the logical solution. But logical solutions never work their way into government. They won't abolish the income tax because these greedy politicians want to redirect the fruits of your labor to their friends. I saw that you voted for one of the two mainstream candidates -- Obama, if I recall. That was your mistake. It was better to throw your vote at a third party, because it's just not practical to have these two other parties run things into the ground. Even if you gave your vote to pure socialist outsiders, you would do better than giving it to a republican or democrat.
That's the plan. As the economy settles in to its lower level of economic pace and the high unemployment rate becomes acknowledged as structural, there will be "package after package" until the world gags on US debt. And the buying power of everyone's money will be degraded as the $USD gets rejected... and that inflation thingy.
Taking X billion from productive citizens and companies, and giving it to a bunch of unemployed welfare recipients, is not exactly a value-creating activity. It'll mostly get spent on booze, cigarettes, and big macs. Government stimulus generally makes a recession worse, not better, because it takes $1 and turns it into something worth a lot less than $1.