The much talked about multi-tiered stimulus package President Obama promised voters is a far cry from what many believed would serve as a boost to the nation’s sagging economy. Obama’s plan was supposedly geared to infuse $825 billion into various programs at the federal, state and local levels of government.
Obama has stated that the monies would be put into the hands of those most in need. However, the latest information released by the Congressional Business Office suggests the President’s plan will have no impact on the nation’s economy.
Of the proposed $825 billion earmarked for economic stimulus, only $26 billion will be spent in 2009. The additional monies won’t be allowed or even available between 2010 and 2019.
The federal government is already operating with a $1.2 trillion budget deficit, a $10.6 trillion national debt and an economy that is clearly in the firm grasp of a recession.
For fiscal 2009, the federal budget is expected to be in the neighborhood of $2.7 trillion. The $26 billion that will be spent this year represents less than 1% of the total federal budget in “stimulus” spending.
In 2010, $110 billion of the $825 billion will be spent and in 2011, another $103 billion. An additional $53 billion will be spent in 2012 and $63 billion every year between 2013 and 2019.
This is a stimulus package?
Less than $5 billion of the $30 billion set aside for highway spending will be spent in the next two years. One in $7 of an $18.5 billion investment for energy efficiency and renewable energy programs would be spent within a year and a half.
Here’s one of my favorite aspects of the stimulus package: $6 billion is being spent over the next 10 years to expand broadband access to rural areas. I can certainly see where Internet access to rural areas will jump start the nation’s economy.
Another noted element of the stimulus package includes $275 billion in tax relief through Social Security payroll deductions. There’s no mention of tax relief for small business owners or self-employed individuals, only tax credits for businesses that purchase new equipment, and bonus depreciation for new plants and equipment.
Tax credits such as these are nothing more than an exercise in futility. Not many business owners will purchase new equipment this year when every economic indicator suggests there isn’t going to be enough revenue generated to justify new equipment expenditures.
In addition, banks are less likely to loan money during this period to businesses seeking to expand in a falling economic environment. Those businesses that do borrow will pay higher interest rates, thus eliminating any benefit from proposed tax credits.
This is not a stimulus package, and anyone claiming that, is just outright lying to you.
I don’t have a problem with the government spending my tax dollars on education, health and infrastructure. But I’d prefer they don’t insult my intelligence and suggest this spending is for the purpose of stimulating the economy.
All of this spending isn’t going to stimulate a damn thing. Allow me to be the person to tell you exactly what this so-called stimulus package really is – a huge government subsidy. That’s it. No more, no less.
Sources for the noted information have been identified below.
Some highlights of the package, by the numbers:
• $825 billion total
• $550 billion in new spending, described as thoughtful and carefully targeted priority investments with unprecedented accountability measures built in.
• $275 billion in tax relief ($1,000 tax cut for families, $500 tax cut for individuals through Social Security payroll deductions)
• $ 90 billion for infrastructure
• $ 87 billion Medicaid aid to states
• $ 79 billion school districts/public colleges to prevent cutbacks
• $ 54 billion to encourage energy production from renewable sources
• $ 41 billion for additional school funding ($14 billion for school modernizations and repairs, $13 billion for Title I, $13 billion for IDEA special education funding, $1 billion for education technology)
• $ 24 billion for “health information technology to prevent medical mistakes, provide better care to patients and introduce cost-saving efficiencies.”
• $ 16 billion for science/technology ($10 billion for science facilities, research, and instrumentation; $6 billion to expand broadband to rural areas)
• $ 15 billion to increase Pell grants by $500
• $ 6 billion for the ambiguous “higher education modernization.”
Source: Committee on Appropriations: January 15, 2009
Here is a further breakdown of the package:
Energy
$32 billion: Funding for “smart electricity grid” to reduce waste
$16 billion: Renewable energy tax cuts and a tax credit for research and development on energy-related work, and a multiyear extension of renewable energy production tax credit
$6 billion: Funding to weatherize modest-income homes
Science and Technology
$10 billion: Science facilities
$6 billion: High-speed Internet access for rural and underserved areas
Infrastructure
$30 billion: Transportation projects
$31 billion: Construction and repair of federal buildings and other public infrastructure
$19 billion: Water projects
$10 billion: Rail and mass transit projects
Education
$41 billion: Grants to local school districts
$79 billion: State fiscal relief to prevent cuts in state aid
$21 billion: School modernization ($15.6 billion to increase the Pell grant by $500; $6 billion for higher education modernization)
Health Care
$39 billion: Subsidies to health insurance for unemployed; providing coverage through Medicaid
$87 billion: Help to states with Medicaid
$20 billion: Modernization of health-information technology systems
$4.1 billion: Preventative care
Jobless Benefits
$43 billion for increased unemployment benefits and job training.
$39 billion to support those who lose their jobs by helping them to pay the cost of keeping their employer provided healthcare under COBRA and providing short-term options to be covered by Medicaid.
$20 billion to increase the food stamp benefit by over 13% in order to help defray rising food costs.
Tax Cuts
Individuals:
*$500 per worker, $1,000 per couple tax cut for two years, costing about $140 billion.
*Greater access to the $1,000-per-child tax credit for the working poor.
*Expansion of the earned-income tax credit to include families with three children.
*A $2,500 college tuition tax credit.
*Repeal of a requirement that a $7,500 first-time homebuyer tax credit be paid back over time.
Businesses:
*An infusion of cash into money-losing companies by allowing them to claim tax credits on past profits dating back five years instead of two.
*Bonus depreciation for businesses investing in new plants and equipment.
*Doubling of the amount small businesses can write off for capital investments and new equipment purchases.
*Allowing businesses to claim a tax credit for hiring disconnected youth and veterans.
Sources: Associated Press: Highlights of Senate economic stimulus plan; January 23, 2009; WSJ: Stimulus Package Unveiled; January 16, 2009; Committee on Appropriations: January 15, 2009
• Less than $5 billion of the $30 billion set aside for highway spending would be spent within the next two years, the CBO said.
• Only $26 billion out of $274 billion in infrastructure spending would be delivered into the economy by the Sept. 30 end of the budget year, just 7 percent.
• Just one in seven dollars of a huge $18.5 billion investment in energy efficiency and renewable energy programs would be spent within a year and a half.
• About $907 million of a $6 billion plan to expand broadband access in rural and other underserved areas would be spent by 2011, CBO said.
• Just one-fourth of clean drinking water projects can be completed by October of next year.
• $275 billion worth of tax cuts to 95 percent of filers and a huge infusion of help for state governments is to be distributed into the economy more quickly.
• The Obama administration said $3 of every $4 in the package should be spent within 18 months to have maximum impact on jobs and taxpayers; if House or Senate versions of the bill do not spend the money as quickly, the White House will work with lawmakers to achieve the goal of spending 75% of the overall package over the next year and a half.
Source: AP: Three-quarters of stimulus to go in 18 months; January 22, 2009; Bloomberg News: Much of Stimulus Wont Be Spent Before 2011, CBO Says; January 20, 2009
The economic stimulus plan now moving through Congress would shower billions of federal dollars on state and local governments desperate for cash:
• The House stimulus bill includes an extra $87 billion in federal aid to state Medicaid programs.
• It allots some $120 billion to boost state and city education programs.
• There’s $4 billion for state and local anticrime initiatives in the legislation, not to mention $30-plus billion for highways and other infrastructure projects.
• $6.9 billion to help state and local governments make investments that make them more energy efficient and reduce carbon emissions.
• $87 billion to states, increasing through the end of FY 2010 the share of Medicaid costs the Federal government reimburses all states by 4.8 percent, with extra relief tied to rates of unemployment.
• $120 billion to states and school districts to stabilize budgets and prevent tax increases and deep cuts to critical education programs.
Overall, about one-quarter of the entire $825 billion recovery package would be devoted to activities crucial to governors, mayors, and local school boards – making them among the plans biggest beneficiaries.
Sources: Committee on Appropriations: January 15, 2009; Reuters: Roads, energy, states win in US stimulus plan;15 January 2009; Christian Science Monitor: States to win big in stimulus sweepstakes; House bill allots almost one-quarter of the $825 billion recovery package to states, localities. How will that boost the economy?; January 25, 2009
I dunno Moondog–I think you might underestimate the importance of internet in rural areas, just think of all the new online shoppers to spend money and stimulate the economy!
Moon Dog
There’s only so much sh*it that one can throw against a wall in the hope that some of it’ll stick. And this is what the administration is now doing. When on the face of it when you look at the lack of action by his predecessor until it was all too late. One only has to wonder what the hell the members of Congress have been doing over the past two terms ? Certainly nothing that was actually in the nation’s best interests when it came to domestic affairs concerning the economy. But then again I look at the idiocy of what’s now taking place as it’s going to be nothing more tnan intemperate pissing contest between the two parties. Bi-partisanship is nothing more than an oxymoron to both.
tophatal ………
Notice one thing about the breakdown of expenses for the Obama stimulus plan.
All of it is being spent here in Americans…on Americans.
A far cry from the $700 billion dollars President Bush borrowed (with Republican’s full blessing) to bring freedom to Iraq.
Why are Conservatives all for borrowing money to spend on training Iraq’s police and army, rebuilding bombed out schools, restoring power and drinking water , prop up Iraqs governments and paying insurgents not to fire on US troops.
But when it comes to spending money here in America….. they call it wasteful.
I think we should ship the Republicans in congress to Iraq.
They seem to have far more sympathy and support for oil rich Iraqi’s than for unemployed Americans
I’m neither a Republican or a Democrat. I’m an Independent Populist, a self-employed business owner and I only want what’s best for America.
I agree with you regarding the former President’s policy in Iraq. Many don’t realize over half of the money we borrowed to fund the war in Iraq came from China and Japan.
However, this so called stimulus package is nothing more than deficit spending. It’s never worked and it never will work. This isn’t spending on America, it’s spending as a result of American taxpayers, like me, who are subsidizing a policy that is doomed to fail.
Moondog I’m going to have to respectfully disagree with you on this post.
All of these plans are long term because it is going to be a long term solution to the mess we are in right now. It took us 8 years to get in it and you expect one package to fix everything in 2009? (One year?!?!)
You are right when you say that we borrowed half of the money from China and Japan but that is why we are have such high debt right now. Whether we spent the money on the war ourselves or borrowed it, either way we don’t own that money anymore. Thats simple accounting.
The country is in way over it’s head, no one has jobs and we don’t really have money to just throw around so where else can we get money from? The higher ups which is what Obama is doing by taxing those that make $250,000 and using it to reinvest in America instead of wasting it overseas.
Your complaining that it’s spending as a result of taxpayers but where else do you expect them to get the money to boost the economy. Where do you think the Government gets money from in the first place??
I have had to read this several times before I could respond. All I can say is that I totally agree with everything you have posted. We own our own construction business, we are building a new house, I have recently retired, and one of our children is trying to buy a house now. You have hit the nail on the head with this one. Thanks for this, my friend.
It seems the the bail outs and stimulus plans are only a smoke screen for more spending and grants for special interest groups, pork barrel projects, and the Democratic party which definitely do not benefit the American taxpayer directly and with in a reasonable time frame.
As usual with the Washington programs costing billions of dollars, only the top tier actually benefit with very little trickling down to the parties actually in need ( small business and the taxpayer. Notice I said taxpayer, not welfare).
As many of the older bloggers can remember It was Carter and Clinton the pushed to get American jobs transfered overseas through the Free trade and NAFTA agreements. Guess what? they were Democrats
Photogr for President in 2012. This time I am serious.
I’m moving to a rural area in hopes I’ll have Internet access in the next 10 years.
Blaze I don’t expect our economy to recover in one year. All indications are that it will take at least two years and possibly three. My problem with this package is the fact it was billed as economic stimulus, which it isn’t.
It does nothing for the economy and it doesn’t help small business owners like me. Who do you think provides most of the jobs in this country? All of those tax credits do me no good.
Here’s an example of the proposed plan as it applies to businesses. I’m in the trucking business, so let’s say I go buy 10 tractors and 10 trailers. Based on the plan, I’ll get a tax credit for new equipment purchases. But considering the amount of freight I need to support that purchase isn’t available, then I’ll have a note on that equipment but not enough revenue to support the purchase. But hey, I’ll get a tax credit for buying the new equipment. Moreover, the money I’d have to borrow to buy that equipment is going to cost me more due to a higher interest rate. But hey, I’ll get a tax credit.
Not suggesting you don’t know this but if you don’t, do some research and find out what happened after the great depression. It’s the exact same scenario. by 1940, the nation had an unemployment rate of greater than 14%. Deficit spending never works. Again, I don’t have a problem with spending on core programs, but don’t tell me this program stimulates the economy because it doesn’t and it never will.
The only way to stimulate this economy is to figure how we can recapture the tons of lost manufacturing jobs. I’m not smart to do that, but perhaps somebody out there is. This administration has got to be business friendly or we’re going to be in worse shape than we are now.
Do you realize the Chinese are shutting down their plants for a month because of the slowdown in this country? That effects me directly and costs me money.
While we may disagree on the subject matter, it sounds like we both want what’s best for America. My way is better – lol.
[...] Obama’s Unstimulated Stimulus < Moondog Sports [...]
[...] company closures, and layoffs. Though the government has proposed yet another stimulus package (which MoonDog is not impressed with), like Circuit City, the vast majority of companies on the national landscape are not “The Big [...]
[...] company closures, and layoffs. Though the government has proposed yet another stimulus package (which MoonDog is not impressed with), like Circuit City, the vast majority of companies on the national landscape are not “The Big [...]
[...] Details on Obama’s stimulus plan. [Moondog Sports] [...]