Will the Obama Stimulus Package Work?

The Stimulus Package will it work, this question has been asked at every work place, restaurant, and pub and sporting event since February.   No matter where you go among the sophisticated literate to the less than up to date populace everyone is weighing in on this subject.

Even CNBC’s  Jim Cramer , from  the popular Mad Money stock market  show , well know as the first public predictor of the banking melt down in October of 2007- where he publicly said –“they know nothing”- predicting the ensuing banking meltdown. Jim is very concerned that what has been dedicated to infrastructure spending is far less than most believes, saying that it may be as little as $300 Billion with the Boston big dig costing  $200M.

Shovel Ready

Shovel ready means that the projects will not start for 12-18 months – way to far off for the unemployed who are looking for a job today.  Very few details have been shared on the money dedicated to alternative energy- an Obama campaign promise that was popular when gas prices were $4.00 a gallon. Since gas prices have temporarily gone down- T. Boone Pickens Wind farm projects have lost considerable steam.

A major concern is that the money that will be useful in creating jobs and stimulus 2-3 years out should no be spent until an assessment can be made if this initial money was used wisely. Most Republicans think Obama administration has made an effort to include them in the process- but many on both sides of the aisle agree Obama can not go out on  a limb alone if this stimulus package were not to work it would keep him from being re-elected in four years.

The Associated Press reported on Yahoo! News that, “The nearly $900 billion plan includes tax cuts and credits as well as a wide range of spending on infrastructure, aid to states, energy, environment and much more — all designed to prevent the economy from sinking further. Yet the cost will be $1.5 Trillion including 5 years of interest- leaving many Americans to wonder how this will be paid and by whom.”

Clearly most Americans head spin at the high price tag and ask a simple question: How will we know it works? A fair question after the fall 2008 bank TARP bailout has left those same folks wondering about its effectiveness.

The legislation would reduce taxes withheld from paychecks. This involves a refundable tax credit worth up to $500 for single filers and $1,000 for joint filers over one year. The tax credit is a popular idea with most taxpayers, but will be not much help to the currently unemployed.

Other tax measures in the Senate bill are designed to support poorer Americans who presumably would spend, not save, the money. These include expanding the earned income tax credit and the child tax credit. These wouldn’t immediately stimulate the economy since they’re claimed on tax forms, and the expansion would apply only to the 2009 tax year.

The Associated Press reported in Yahoo! News, “Obama and the Democrats favor a different approach. The legislation provides a cut of $500 for workers and $1,000 for working couples, even if they do not earn enough in wages to pay income taxes.”

The House Democrats jettisoned money to reseed the National Mall and a provision to make it easier for states to offer family planning services (contraception) to the poor under the Medicaid program.

Much of the spending is in the form of health care for the poor; education funds for the states to avoid the impact of their own budget cuts on schools, and more money for food stamps, unemployment insurance and worker retraining funds. This looks like the best short term benefit to those unemployed and struggling. Yet selectively some states have not accepted the money and have not included extensions to unemployment. Virginia has created some descent by not offering the extensions.

Additionally, the bill includes an initial payment on two of Obama’s domestic initiatives. They include expanding health information technology and providing spending and tax cuts to encourage development of new jobs while increasing reliance of alternative energy sources.  On the energy subject – the House Bill would allow people funding solar installations to get a tax break refunded to them.  it is reported by AP that the Senate Bill has a manufacturer (not installer) tax credit. Whatever the breakdown, Republicans said there was far too much spending, and not enough in tax cuts.

Whatever the final package brings we all hope that American’s go back to work, the stock market recovers and people can get on with their lives- perhaps wiser than before.

This  particular stimulus package reinforces the wisdom of the country forefathers in the two party system- that is what will offer this stimulus package the best shot at doing what every one hopes it will- get us out of this recession, put people back to work again, and reinstate America as a prosperous country. Something we all want democrat or republican.