It makes me want to run and take another quick shower, but yes I’ll admit that I am curious about what government freebies will trickle down to our little apartment in the new $787,000,000,000 package. It was passed last night by 246 House Democrats, 57 Senate Democrats and 3 Senate Republicans. Now the last step is the official signing by President Obama, which is scheduled for Monday. The 1,073-page bill contains hundreds of provisions, but what does it all mean?

Here is a fantastic summary from the WSJ listing each and every provision and totaling their cost. Also, check out this hard to read but really cool word tree representation of the bill. There is so much stuff out there, mostly old descriptions about what was contained in earlier versions of the bill, that we really had to dig to come up with this summary. We also tried to make it more meaningful than $50 billion here or $87 billion there. Here goes…

Hopefully it will help and serve as a starting point for your further research if you are interested in more detail.

How the average citizen will be affected:
(our research of the bill, in order of what we thought was the largest impact to a regular blog reader)

If you are buying stuff:

1. Buying a House this year? Free $8,000 of your tax money back! A tax credit for first-time homebuyers increases from $7,500 to $8,000, and will not have to be repaid if you keep the home for three years. This is refundable meaning even if you don’t pay any taxes Uncle Sam will cut you a check.
2. Buying a new Car? Taxpayers earning less than $125,000 can deduct sales and excise taxes paid on new cars. This will help reduce the instant 25% depreciation you experience when you drive it off the lot.

If you have a job:

1. Tax credits for all! If you are employed you will receive $400 over the next year. If you are married you will receive $800 as a couple (phase outs for those making > $75k). According to most summaries, this equates to an extra $8 a week. Since you are given the money in $8 (or $16 if you’re paid biweekly) chunks the hopes are that you forget that it is a bonus and spend it on stuff.
2. Extra tax credits for poor families especially those with kids.
3. A shield to prevent 24 million households from paying the AMT (alternative minimum tax). It was designed to prevent about 155 rich people in the 1970s from reducing their taxes with loopholes. It wasn’t indexed to inflation and since it doesn’t make sense to actually fix the problem, this will temporarily delay the responsibility to other elected officials.

If you lost your job:

1. $25 a week bonus in unemployment benefits. Currently, the nationwide average weekly check to those receiving unemployment benefits is $295.05, ranging from $179.08 in Mississippi to $408.28 in Hawaii, according to the National Employment Law Project.
2. Extension of jobless benefits for up to 33 extra weeks if you exhaust your first normal 26 week period.
3. Suspension of the tax on unemployment benefits up to $2,400.
4. 65% COBRA subsidy for laid-off workers to continue paying premiums for former employer’s health plan for nine months. Thus you pay only 35% of your COBRA bill for a little while. That’s pretty nice.

If you are a student:

1. A higher education tax credit. Parents of college students would be eligible to claim a tax credit of up to $2,500.
2. Increase in Pell Grant to $5,350 in 2009 and to $5,550 in 2010, and other increases to student aid. Contact your financial aid office for more info tailored to your school and situation.

If you are poor:

1. 13% increase in food stamp payments.

If you own a business:

1. Businesses will be able to more quickly deduct the cost of investments from their taxable income
2. Small businesses will be allowed to write-off up to $250,000 of capital expenditures in the year of acquisition
3. Lots of other good stuff. Check out the WSJ breakdown.

If you are collecting Social Security:

1. Retirees who receive Social Security benefits and individuals on disability will receive a $250 tax credit.

Each of the above categories has many additional smaller components that may affect different people in different situations. I highly recommend exploring the full breakdown if you have questions about your qualifications.

The rest of the stuff:
The rest, and man there sure is a lot, may only affect you if you work in a particular field or are involved with some particular government agency. For Example:

• Grants for rural waste and waste disposal
• Grants to provide wireless and broadband infrastructure to communities, including public computer centers and sustainable adoption of broadband service
• Physics research including high-energy physics, nuclear physics and fusion energy sciences
• Purchase and deployment of non-intrusive inspection systems for Customs and Border Protection
• Loans for communities to upgrade waste water treatment systems and drinking water infrastructure
• “Early Head Start” programs for low-income infants

I will admit that it is all positive stuff that will help some people out. It is hard for the government to spend money and not help some person somewhere.

But the challenge is, did congress choose the right people to help or the wrong people, and will it have the desired effect of creating and saving jobs?

Does it have the right mix of tax cuts and spending increases? (comic to illustrate)

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Is it big enough to spill over and change national recessionary sentiment?

Will it work fast enough? (comic to illustrate)

Will it work too fast? (comic to illustrate)

Is it sustainable, or are we propping up things in an effort to save jobs that should die on their own?

Where to learn more:

• WSJ main item breakdown
• USA Today
• Columbus Dispatch
• CNN Article

It’s too late now, the damage is done, but it sure was refreshing to see this next article under the stimulus details. Seems a little hypocritical after spending so much, but to even be thinking about it is a very good thing.

Obama to Shift Focus to Budget Deficit

“With a $787 billion stimulus package in hand, President Barack Obama will pivot quickly to address a budget deficit that could now approach $2 trillion this year.

He has scheduled a “fiscal-responsibility summit” on Feb. 23 and will unveil a budget blueprint three days later, crafted to put pressure on politicians to address the country’s surging long-term debt crisis.”

Related posts:

1. What’s in the $700 Billion bailout plan – The Emergency Economic Stabilization Bill of 2008
2. $700 Billion Bailout: What Alternatives Do We Have?

Tagged as: Politics and Government