It’s officially called the American Recovery and Reinvestment Act. This plan comes in at $787 billion. It won’t make everyone happy, but it will help some people and that’s the best we can hope for given the partisan nature of our government. I’m not going to summarize the entire bill, but here are the key points that will impact many Americans. Visit the New York Times for a complete summary of everything in the bill.
$20 billion in increased food stamp funding. As food costs rise and more people lose their jobs, food stamps are the thing that stands between families and hunger. Another $900 million is included for other government nutrition programs and food banks.
The maximum college grant is increased to $5,350, which will help families struggling to afford college.
Social Security Supplement:
Recipients of Social Security, SSI, and other government pension programs will receive a one-time payment of $250. These people are very likely to spend the money rather than save it.
Aid to States:
Many states are drastically cutting their budgets due to massive decreases in property tax revenue (as well as income and sales tax in states with those taxes.) If states can’t spend money, then people will lose jobs or services. It’s not direct stimulus, but it will keep teachers, cops, and firefighters employed. It will also help with Medicaid funding and other state initiatives.
Most of the energy spending will go toward creating or maintaining jobs related to modernizing our current energy conduits, developing new energy sources and technologies, or helping people buy more energy-efficient appliances. If you need to weatherize your home (which will reduce your energy costs) or need to buy new appliances, see if you qualify for these programs.
If you became or become unemployed between Sept 1, 2008 and Dec. 31, 2009, the government will cover 65% of your COBRA payments so that you can keep your insurance for 9 months.
Although you may not use the facilities being upgraded through infrastructure projects, the programs will create many new construction jobs.
Income Tax Credit:
Individuals will receive a credit of 6.2% of earned income, up to a max of $400 per individual and $800 for couples for 2009 and 2010. Again, the credit phases out at $75,000 and $150,000 respectively. The credit is refundable, so people with no tax liability will receive money. You may see the credit as additional money in your paycheck (around $13 a week.) You will not receive a stimulus check from the government.
Homebuyer Tax Credit:
Individuals earning up to $75,000 and couples earning up to $150,000 will receive a tax credit worth up to $8,000 for the purchase of a new home. The credit is refundable and not repayable unless you sell your home within three years. It phases out after the income limits.
Child Tax Credit:
People earning as little as $3,000 will now qualify for the child tax credit.
HOPE Tax Credit:
Expands the HOPE tax credit to $2,500 a year for four years of college tuition and textbooks. It’s partially refundable and phases out starting at $80,000 for individual and $160,000 for couples.
Hybrid Tax Credit:
If you’re thinking of buying a new car, this increases the tax credit for the purchase a new plug-in hybrid to $7,500.
New Car Tax Credit:
If you can’t afford a hybrid, this is a tax deduction for the state, local, and excise taxes for the purchase of a new car up to $49,500. The credit phases out at $125,000 for individuals and $250,000 for couples.
Something for people who’ve lost their jobs: extension of unemployment through the end of the year. Unemployed workers receive up to 20 weeks of unemployment insurance, up to 33 weeks in high unemployment areas. Increases the average payment by $25 a week. It also exempts the first $2,400 from federal income taxes in 2009.
This is usually passed at the end of the year, but it will affect most Middle Class people who still have jobs. At the very least, it will save the IRS a boatload of money they usually spend redoing all the forms when Congress waits until November or December to pass the patch.
There’s a lot more in the bill, but these initiatives are the ones most likely to impact you or someone you love. I was also happy to see that this bill includes oversight, unlike some programs (TARP). Go to Recovery.gov for reports from the oversight board. I’m sure it won’t be perfect, but some oversight is better than none. Personally, I hope to take advantage of the new home and new car tax credit.
What do you like or dislike about the stimulus package? The comments are open for debate.