President Barack Obama signed his economic stimulus package into law on Feb. 17, promising to dish out $787 billion in an attempt to rescue the economy. But questions — lots of them — remain.
Let’s start from the beginning. Where is all this money coming from?
The money will come from massive amounts of borrowing through the sale of U.S. Treasury bonds to domestic and foreign investors, which will add to a national debt that already stands at $10.7 trillion, approximately $36,000 per U.S. citizen. As part of the plan, Congress raised the allotted ceiling of the debt to $12 trillion for the 2010 federal budget. The 2009 budget deficit could reach $1.6 trillion as a result of the stimulus package and bank-bailout spending.
And where is the money going?
The lion’s share of the bill is going to tax cuts ($244 billion) and aid to state and local governments ($217 billion).
A tax cut for $400 to $800 is going to most working tax payers. In addition, billions of dollars have been set aside for infrastructure and technology development, two of the stimulus package’s biggest winners. Obama’s stimulus plan will help Americans across the board. It intends to help with unemployment and job creation, including “green” jobs, fund improvements of infrastructure, and bolster the use of technology in health care.
The plan includes middle-class tax credits of $4oo for an individual and $800 for families. Section 36a of the plan defines “middle class” as individuals whose adjusted gross income is less than $75,000 or as families who make less than $150,000. This credit translates into roughly an additional $13 a week in an individual’s paycheck or $26 for a family. It should be expected to begin around June.
The plan was passed at $787 billion. “The recovery package has tax breaks for families that send a child to college, purchase a new car, buy a first home or make the ones they own more energy efficient,” reported The Associated Press.
Money not used for tax cuts is going to programs that will benefit our transportation systems, schools, medical system, and energy consumption, among other critical aspects of American life.
What does President Obama hope to get out of his stimulus plan?
President Obama hopes first and foremost to create over 3.5 million jobs. He also hopes to double the production of alternate energy, to modernize more than 75% of federal buildings, improve energy efficiency in American homes, push to make all America’s medical records computerized, improve education, expand Broadband across America, and invest in science, research and technology.
What are some ways in which the stimulus plan will affect schools?
One of the main goals is to keep teachers in their current positions. A $54 billion fund will help to restore or prevent state budget cuts. An extra $25 billion will go to the No Child Left Behind Act and special education programs. The stimulus will also add around $4 billion to Head Start and Early Head Start educational programs and child care programs.
What are some ways in which the stimulus plan will affect higher education?
Overall, the bill will set aside $32 billion to help college students, researchers and campuses. The Federal Pell Grant, a financial aid system which provides need-based grants to low-income undergraduates and some post baccalaureate students to support access to post-secondary education, will increase from $4,731 to $5,350 starting July 1, 2009 and $5,550 in 2010-2011. This will be enough to cover three-quarters of most four-year colleges and mean an extra 800,000 students will get funding. Computer expenses will be an allowable expense for 529 savings plans. $54 billion of the state stabilizing fund will be spent on modernizing facilities. $1.5 billion will be set aside for university research facilities
Who is in favor of the package?
Senate Democrats, House Democrats, the White House, and a trio of moderate senate Republicans hailing from Maine and Pennsylvania. Polls show a slim majority of the public (53%) are in favor of the package.
Who is opposed to the stimulus bill?
Senate Republicans excluding Snowe, Specter, and Collins, all House Republicans, and many economic conservatives oppose the bill on the magnitude of money being spent, as well as some social conservative elements debating on whether spending money on birth control and education counts as economic stimulus.
Read an economic conservative’s opinion on the package here.
What role has President Obama taken with the stimulus package?
President Obama has aggressively pushed for the package since coming into office. Despite his requests for bipartisan legislation, voting was almost completely along party lines. Some are saying his decision to cut some spending and give out tax cuts while barely getting republican votes are signs that Obama buckled too fast with no gain.
Will the plan actually boost consumer spending and the job market?
The BBC reports the plan is supposed to “help states close their budget gaps and avoid laying off state employees.” The idea is the plan will rescue the strain on consumers when they spend money. The Boston Globe reported there is no guarantee the money will smoothly flow into the economy. The bottom line is that it “will not be easy” and could take years to see any results, according to ABC News.
How does this compare to past stimulus plans?
People won’t be getting their money in the form of rebate checks, as they did during the Bush Administration. Reuters said the stimulus plan is “slightly larger” than the Marshall Plan. MSNBC.com reported the 2001 tax cut package was $1.35 trillion, and was approved by 12 Senate Democrats and 28 House Democrats.
How will the stimulus package help those who are unemployed in the US?
The stimulus package will help those who are unemployed by providing a $25 increase a week in unemployment benefits. It is hoped that this money will be spent and will help to broaden the economy while people search for new jobs.
How will the stimulus package help to bring about technological advances in the US?
Part of the stimulus package includes a section for $7 billion dollars to be put towards broadband expansion into rural areas of the US. Also, it is hoped that news jobs will be created while investing in new sources of “green energy.”
Will the stimulus package increase investment?
It is hoped that the stimulus package will increase investment across the US, and that everyone will be able to benefit from it.
Why are people against it?
House Republicans have criticized the bill for incorporating too much government spending. Also, in a statement paid for by the Cato Institute, many professors from across the country have put together a summary of their disagreements. They argue that more government spending did not pull the U.S. out of the Great Depression, and they believe the main focus should be on making jobs more accessible.
strong>When should the American people begin to see the effects of the stimulus package?
President Obama’s senior advisor, David Axelrod, told Fox News earlier today that the package will eventually have a great effect on the American people. Both he and White House Spokesman Robert Gibbs predict that the situation will “get worse before it gets better,” but are hopeful that this bill will benefit America. Gibbs emphasized that action needed to be taken as soon as possible. “The urgency to get something done was very important,” he told CBS
Will the plan work?
Lucas Correia, Jackie Hai, Carol Lawless, Stephanie McPherson, Michael Messina, Alyssa Montalbano, Keith Shannon, Ted Rogers and Rosie Walunas contributed to this report.