Recession Survival Tips

President Obama’s stimulus plan passed in the House of Representatives with no Republican votes.  Now the bill must pass the Senate before it goes to a Conference committee.  Once it leaves Conference Committee, the final version will be voted on by both the House and Senate.

Thus, it is very likely that the current bill will undergo more changes before Mr. Obama signs it into law.  Considering the concessions that the Democrats made to appease Republicans, and the Republicans commitment to being obstructionists, one can only hope that we may get a better bill.  However, the stimulus plan as it stands is a less than stellar piece of legislation.

The stimulus package in its current incarnation will cost approximately $819 billion dollars.  A partial breakdown follows:

• The House has allotted $322 billion dollars for infrastructure such as, construction projects, education and school upgrades, renewable energy research, and scientific and technological research.  Once again, the emphasis is on projects that are already budgeted and ready to break ground.  Modernizing schools and health care information systems are excellent ideas.
  Yet, at $322 billion, these projects are woefully underfunded and suffer from a crippling lack of progressive vision.  To give you an idea of how little this amount is, it is less than half of what we have already paid to bail out Wall Street and the banks.

• The stimulus plan provides $87 billion dollars for Medicaid so that states do not have to cut benefits in the face of budget shortfalls.  In addition, $43 billion has been allotted to increase and extend unemployment benefits.  The Cobra health care plan will receive $39 billion dollars, which will allow the government to cover 65% of an individuals Cobra costs even though they may have lost their job.  In addition, the stimulus will provide more money for social safety net programs such as food stamps.

• Tax cuts account for approximately $275 billion dollars.  Over $145 billion will go to a middle class tax cut.  Single workers making less than $75,000 will get a $500 tax break, while couples making less than $150,000 will get a $1,000 tax cut.  There is a lower income tax cut that amounts to $15 billion dollars.  This will expand the EITC for many low income workers who do not pay taxes.  Lastly, the bill provides for $17 billion in corporate tax cuts.

The stimulus plan is still in flux.  The Senate has already proposed another $80 billion in tax cuts.  What is obvious is that the Republicans have effectively changed the terms of the debate.  A proposed stimulus package that was considered  too small to adequately jump start the economy is now considered too big.  Past the political posturing, it will be us, who ultimately pay the price for a botched plan.

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