By The Associated Press
February 14, 2009
An examination of how the economic stimulus plan will affect
Americans.
Taxes:
The recovery package has tax breaks for families that send
a child to college, purchase a new car, buy a first home or
make the ones they own more energy efficient.
Millions of workers can expect to see about $13 extra in their
weekly paychecks, starting around June, from a new $400 tax
credit to be doled out through the rest of the year. Couples
would get up to $800. In 2010, the credit would be about $7.70
a week, if it is spread over the entire year.
The $1,000 child tax credit would be extended to more low-income
families that don't make enough money to pay income taxes,
and poor families with three or more children will get an expanded
Earned Income Tax Credit.
Middle-income and wealthy taxpayers will be spared from paying
the Alternative Minimum Tax, which was designed 40 years ago
to make sure wealthy taxpayers pay at least some tax, but was
never indexed for inflation. Congress fixes it each year, usually
in the fall.
First-time homebuyers who purchase their homes before Dec.
1 would be eligible for an $8,000 tax credit, and people who
buy new cars before the end of the year can write off the sales
taxes.
Homeowners who add energy-efficient windows, furnaces and
air conditioners can get a tax credit to cover 30 percent of
the costs, up to a total of $1,500. College students — or
their parents — are eligible for tax credits of up to
$2,500 to help pay tuition and related expenses in 2009 and
2010.
Those receiving unemployment benefits this year wouldn't pay
any federal income taxes on the first $2,400 they receive.
___
Health Insurance:
Many workers who lose their health insurance when they lose
their jobs will find it cheaper to keep that coverage while
they look for work.
Right now, most people working for medium and large employers
can continue their coverage for 18 months under the COBRA program
when they lose their job. It's expensive, often over $1,000
a month, because they pay the share of premiums once covered
by their employer as well as their own share from the old group
plan.
Under the stimulus package, the government will pick up 65
percent of the total cost of that premium for the first nine
months.
Lawmakers initially proposed to help workers from small companies,
too, who don't generally qualify for COBRA coverage. But that
fell through. The idea was to have Washington pay to extend
Medicaid to them.
COBRA applies to group plans at companies employing at least
20 people. The subsidies will be offered to those who lost
their jobs from Sept. 1 to the end of this year.
Those who were put out of work after September but didn't
elect to have COBRA coverage at the time will have 60 days
to sign up.
The plan offers $87 billion to help states administer Medicaid.
That could slow or reverse some of the steps states have taken
to cut the program.
___
Infrastructure:
Highways repaved for the first time in decades. Century-old
waterlines dug up and replaced with new pipes. Aging bridges,
stressed under the weight of today's SUVs, reinforced with
fresh steel and concrete.
But the $90 billion is a mere down payment on what's needed
to repair and improve the country's physical backbone. And
not all economists agree it's an effective way to add jobs
in the long term, or stimulate the economy.
___
Energy:
Homeowners looking to save energy, makers of solar panels
and wind turbines and companies hoping to bring the electric
grid into the computer age all stand to reap major benefits.
The package contains more than $42 billion in energy-related
investments from tax credits to homeowners to loan guarantees
for renewable energy projects and direct government grants
for makers of wind turbines and next-generation batteries.
There's a 30 percent tax credit of up to $1,500 for the purchase
of a highly efficient residential air conditioners, heat pumps
or furnaces. The credit also can be used by homeowners to replace
leaky windows or put more insulation into the attic. About
$300 million would go for rebates to get people to buy efficient
appliances.
The package includes $20 billion aimed at "green" jobs
to make wind turbines, solar panels and improve energy efficiency
in schools and federal buildings. It includes $6 billion in
loan guarantees for renewable energy projects as well as tax
breaks or direct grants covering 30 percent of wind and solar
energy investments. Another $5 billion is marked to help low-income
homeowners make energy improvements.
About $11 billion goes to modernize and expand the nation's
electric power grid and $2 billion to spur research into batteries
for future electric cars.
___
Schools:
A main goal of education spending in the stimulus bill is
to help keep teachers on the job.
Nearly 600,000 jobs in elementary and secondary schools could
be eliminated by state budget cuts over the next three years,
according to a study released this past week by the University
of Washington. Fewer teachers means higher class sizes, something
that districts are scrambling to prevent.
The stimulus sets up a $54 billion fund to help prevent or
restore state budget cuts, of which $39 billion must go toward
kindergarten through 12th grade and higher education. In addition,
about $8 billion of the fund could be used for other priorities,
including modernization and renovation of schools and colleges,
though how much is unclear, because Congress decided not to
specify a dollar figure.
The Education Department will distribute the money as quickly
as it can over the next couple of years.
And it adds $25 billion extra to No Child Left Behind and
special education programs, which help pay teacher salaries,
among other things.
This money may go out much more slowly; states have five years
to spend the dollars, and they have a history of spending them
slowly. In fact, states don't spend all the money; they return
nearly $100 million to the federal treasury every year.
The stimulus bill also includes more than $4 billion for the
Head Start and Early Head Start early education programs and
for child care programs.
___
National Debt:
One thing about the president's $790 billion stimulus package
is certain: It will jack up the federal debt.
Whether or not it succeeds in producing jobs and taming the
recession, tomorrow's taxpayers will end up footing the bill.
Forecasters expect the 2009 deficit — for the budget
year that began last Oct 1 — to hit $1.6 trillion including
new stimulus and bank-bailout spending. That's about three
times last year's shortfall.
The torrents of red ink are being fed by rising federal spending
and falling tax revenues from hard-hit businesses and individuals.
The national debt — the sum of all annual budget deficits — stands
at $10.7 trillion. Or about $36,000 for every man, woman and
child in the U.S.
Interest payments alone on the national debt will near $500
billion this year. It's already the fourth-largest federal
expenditure, after Medicare-Medicaid, Social Security and defense.
This will affect us all directly for years, as well as our
children and possibly grandchildren, in higher taxes and probably
reduced government services. It will also force continued government
borrowing, increasingly from China, Japan, Britain, Saudi Arabia
and other foreign creditors.
___
Environment:
The package includes $9.2 billion for environmental projects
at the Interior Department and the Environmental Protection
Agency. The money would be used to shutter abandoned mines
on public lands, to help local governments protect drinking
water supplies, and to erect energy-efficient visitor centers
at wildlife refuges and national parks.
The Interior Department estimates that its portion of the
work would generate about 100,000 jobs over the next two years.
Yet the plan will only make a dent in the backlog of cleanups
facing the EPA and the long list of chores at the country's
national parks, refuges and other public lands. It would be
more like a down payment.
When it comes to national parks, the plan sets aside $735
million for road repairs and maintenance. But that's a fraction
of the $9 billion worth of work waiting for funding.
At EPA, the payout is $7.2 billion. The bulk of the money
will help local communities and states repair and improve drinking
water systems and fund projects that protect bays, rivers and
other waterways used as sources of drinking water.
The rest of EPA's cut — $800 million — will be
used to clean up leaky gasoline storage tanks and the nation's
hazardous waste sites.
___
Police:
The stimulus bill includes plenty of green for those wearing
blue.
The compromise bill doles out more than $3.7 billion for police
programs, much of which is set aside for hiring new officers.
The law allocates $2 billion for the Byrne Justice Assistance
Grant, a program that has funded drug task forces and things
such as prisoner rehabilitation and after-school programs.
An additional $1 billion is set aside to hire local police
under the Community Oriented Policing Services program. The
program, known as COPS grants, paid the salaries of many local
police officers and was a "modest contributor" to
the decline in crime in the 1990s, according to a 2005 government
oversight report.
Both programs had all been eliminated during the Bush administration.
The bill also includes $225 million for general criminal justice
grants for things such as youth mentoring programs, $225 million
for Indian tribe law enforcement, $125 million for police in
rural areas, $100 million for victims of crimes, $50 million
to fight Internet crimes against children and $40 million in
grants for law enforcement along the Mexican border.
___
Higher Education:
The maximum Pell Grant, which helps the lowest-income students
attend college, would increase from $4,731 currently to $5,350
starting July 1 and $5,550 in 2010-2011. That would cover three-quarters
of the average cost of a four-year college. An extra 800,000
students, or about 7 million, would now get Pell funding.
The stimulus also increases the tuition tax credit to $2,500
and makes it 40 percent refundable, so families who don't earn
enough to pay income tax could still get up to $1,000 in extra
tuition help.
Computer expenses will now be an allowable expense for 529
college savings plans.
The final package cut $6 billion the House wanted to spend
to kick-start building projects on college campuses. But parts
of the $54 billion state stabilization fund — with $39
billion set aside for education — can be used for modernizing
facilities.
There's also an estimated $15 billion for scientific research,
much of which will go to universities. Funding for the National
Institutes of Health includes $1.5 billion set aside for university
research facilities.
Altogether, the package spends an estimated $32 billion on
higher education.
___
The Poor:
More than 37 million Americans live in poverty, and the vast
majority of them are in line for extra help under the giant
stimulus package. Millions more could be kept from slipping
into poverty by the economic lifeline.
People who get food stamps — 30 million and growing — will
get more. People drawing unemployment checks — nearly
5 million and growing — would get an extra $25, and keep
those checks coming longer. People who get Supplemental Security
Income — 7 million poor Americans who are elderly, blind
or disabled — would get one-time extra payments of $250.
Many low-income Americans also are likely to benefit from
a trifecta of tax credits: expansions to the existing Child
Tax Credit and Earned Income Tax Credit, and a new refundable
tax credit for workers. Taken together, the three credits are
expected to keep more than 2 million Americans from falling
into poverty, including more than 800,000 children, according
to the private Center on Budget and Policy Priorities.
The package also includes a $3 billion emergency fund to provide
temporary assistance to needy families. In addition, cash-strapped
states will get an infusion of $87 billion for Medicaid, the
government health program for poor people, and that should
help them avoid cutting off benefits to the needy.
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