Reading Between the Lines on the Proposed Stimulus Package
Posted: Monday, January 28, 2008
by Richard Walrath
Articles and Answers.com
The $150 billion dollar economic growth package was announced by President Bush on January 24, 2008 after a bipartisan agreement was reached with the leaders of the U.S. House of Representatives. The plan consists of $100 billion in temporary relief for families, and $50 billion in business incentives.
The plan calls for taxpayers to receive rebates of "up to" $600 for individuals, and "up to" $1,200 for couples. Anyone eligible for the above, would also be eligible for an additional $300 per child, which sort of gives you the impression that if you're married and have two kids you're about to receive "up to" $1,800 from Uncle Sam.
Don't rush out and spend the money yet!
Whenever this administration uses the words "up to" you can bet your booties you're going to get less, so how much less? Department of the Treasury examples follow:
Married with children: 1) Married couple with two children*, earned income of $4,000, no federal income tax paid. Individual rebate = $600 Child tax credit = $600 TOTAL = $1,200 2) Married couple with two children, earned income in excess of $3,000, AGI = $45,000, federal income tax is $323. Individual rebate = $600 Child tax credit = $600 TOTAL = $1,200 3) Married couple with two children, AGI = $48,000, federal income tax is $773. Individual rebate = $773 Child tax credit = $600 TOTAL = $1,373 4) Married couple with two children, AGI = $80,000, federal income tax paid in excess of $1,200. Individual rebate = $1,200 Child tax credit = $600 TOTAL = $1,800 5) Married couple with two children, AGI = $160,000, federal income tax paid in excess of $1,200. Individual rebate = $1,200 Child tax credit = $600 Phaseout reduction = ($500) [5% x ($160,000 - $150,000) = $500] TOTAL = $1,300 *All children referenced in the examples are qualifying children for purposes of the child tax credit.Looks like you won't be pulling in $1,800 unless your adjusted gross income is more than $80,000 and you have paid in more than $1,200 in federal income tax. The current agreement also provides a temporary tax cut for businesses providing them with the opportunity to purchase equipment this year and deduct an additional 50% of the cost in 2008. Treasury Secretary Paulson says that he hopes the Senate doesn't meddle with the stimulus package. He's afraid that the Senate might put some stimulus into it--like money for food stamps as well as extended unemployment compensation. The package does not provide assistance in the form of extended unemployment insurance benefits, food stamp money, or spending on infrastructure, but it does provide some assistance for homeowners who are struggling to keep their homes in the current mortgage crisis. Will it be enough? Of course not!
How much worse are economic conditions today than they were when the first Bush tax-cuts went into effect?
Is there anyone who would disagree that they are much worse today than they were then?
So, why are we talking about a $150 billion stimulus, maybe, when hundreds of billions in tax-cuts were put into effect then? Granted, most of those Bush tax cuts went to the rich and business, and we see how much benefit they provided to the economy.
The purpose of the Jobs and Growth Plan of 2003 was to stimulate the economy with the influx of $350 billion dollars. On a temporary basis it succeeded in providing some stimulus, but in 2003 we weren't looking at 1.8 million subprime loans getting ready to reset with higher rates over the next two years.
If the situation is far worse today--as it is--how is $150 billion going to solve the problem?
Richard E Walrath is a former budget analyst and co-owner of the Articles and Answers News and Information sites.
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Top-level comments on this article: (3 total)Richard, Is this the goofyist President or what? Spend trillions at war and then hand the middle class peanuts. Same old stuff. I'll be so glad when he and his cronies are gone! Wonderful article about our screwed up economic status under the current administration.
Richard, as you say, "Looks like you won't be pulling in $1,800 unless your adjusted gross income is more than $80,000 and you have paid in more than $1,200 in federal income tax." That is not average America at $6,7, 8 dollars and hour jobs. At that income you don't need the stimulas. Secondly, when his cronies are gone? They are all his cronies does anyone realize this, just check their records. Third the people who make under $40,000 are behind in everything That is not their net pay. That money will pay bills, fourth Billions have already gone into corportate bailouts, much more then they are throwing at America. Talk of trickle down. Anything we may buy with this money goes mainly to china, they make most of it not American companies who front them. Finally, who will we borrow the monet from? You got it China. Good article, best wishes. RTM
Richard it seems to me the only real solution and one that anyone who bugets knows is that without a consistent cash flow you have problems. No steady work or good paying jobs, then you defer to creative accounting. The middle class can no longer support their goals and they are just realizing they have overplayed their hand. Best Wishes RTM
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