Wednesday, January 28, 2009
Whats' In The new Stimulus Package?
Did this new team in the White House hit the ground running or what? In only eight days they have closed gittmo, reversed the stand on the international family planning gag order, asked the EPA to look into state fuel efficiency standards, strengthened the Clean Air Act and passed a new stimulus package through the House by a vote of 244 vs 188. This has been an exhilarating week. What a breathtaking performance it has been.
That plurality was along party lines but I expect that when the final bill is ready to be sent to the President for his signature in two weeks that more than a few Republican House members would be lending their support.
This massive stimulus package that has something for everyone was cheered today by the financial markets because it is the only hope that more focused government spending and a healthy household sector could start to pull this economy out of this severe recession.
The currently proposed new stimulus amounts to $819 billion divided into an additional $544 billion in Federal spending and another $275 in tax cuts. The new government spending covers the gamut of additional health care expenditures, more unemployment benefits, help to the individual state governments in addition to renewable energy projects and highway spending.The tax cuts are also broadly base. Almost a third; $90 billion; goes to Business expensing while payroll tax holiday amounts to $99 billion while renewable energy tax credits accounts for $20 billion while Tuition tax credit gets $10 billion.
Is this prescription sufficient to restore the patients health? Only if unemployment is not to go above 8-8.5 %. If that threshhold is crossed then an additional stimulus will be called for.