January 26, 2009 - 11:16
ET
What is the money being
spent on-general breakdown between infrastructure, tax cuts, etc…?
Some
highlights of the package, by the numbers:
• $825 billion total (as of
1/15/09)
• $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 SS 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" and "to provide for preventative care and to
evaluate the most effective healthcare treatments."
• $ 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:
NOTE: The following are highlights of the package; for the full
13-page summary from the Appropriations Committee, click here:
(as of
1/15/09)
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.
Taxes
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]
When is the money being is going to be spent, and
on what?
The government wouldn't be able to spend at least
one-fourth of a proposed $825 billion economic stimulus plan until after 2010,
according to a preliminary report by the Congressional Business Office
that suggests it may take longer than expected to boost the economy. The
government would spend about $26 billion of the money this year and $110 billion
more next year, the report said. About $103 billion would be spent in 2011,
while $53 billion would be spent in 2012 and $63 billion between 2013 and 2019.
• 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.
[Note: The CBO's analysis applied only to 40 percent of the
overall stimulus bill, and doesn't cover tax cuts or efforts; a CBO report
outlining all of its costs is expected in the next week or so.]
• 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; link]
Who will be
spending the money? Will the states be receiving any money to spend, community
organizations? Churches?
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; Link]
January 26, 2009 - 11:16
ET
Total Cost of Stimulus
Legislation: $825 billion
How does this compare?
• In 1993, the unemployment was
virtually the same as the rate today (around 7%). Yet, President Clinton’s
proposed stimulus legislation *only* contained $16 billion in spending
•
The total cost of this one piece of legislation is almost as much as the annual
discretionary budget for the entire federal government.
• This
legislation nears a trillion dollars. President Reagan said the best way to
understand a trillion dollars is to imagine a crisp, new stack of $1000 bills.
• If you had a stack four inches high, you’d be a millionaire. A
trillion-dollar stack of $1000 bills would measure just over 63 miles high.
• In $20 bills, a trillion dollar stack would be 3150 miles high. That’s
about the distance between DC and Trujillo, Peru.
• President-elect
Obama has said that his proposed stimulus legislation will create or save 3
million jobs. This means that this legislation will spend about $275,000 per
job. The average household income in the U.S. is $42,000 a year.
• This
bill provides enough spending to give every man, woman, and child in America
$2,700.
• This bill will cost each and every household $6,700 in
additional debt, paid for by our children and grandchildren.
• Although
this legislation has been billed and described as a transportation and
infrastructure investment package, but only three percent ($30 billion) of this
package is for road and highway spending.
• Much of the funding within
the proposed stimulus package will go to programs which already have large,
unexpended balances.
• For example, the draft bill provides $1 billion
for Community Development Block Grants (CDBG), which already has $16 billion on
hand.
• And, this year, Congress has plans to rescind $9 billion in
highway funding that the states have not yet used.
• Deficit spending
will not expand the economy. If that were true, then the current $1.2 trillion
deficit -- the largest in history -- would already be rescuing the economy.
• $800 billion more will not change that.
• Trade groups state
that every $1 billion in highway “stimulus” can be spent creating 34,779 new
construction jobs.
• But Congress must first borrow that $1 billion out
of the private sector.
• The private sector then loses or forgoes
roughly the same number of jobs.
• Japan responded to a 1990 recession
by passing 10 “stimulus” bills over 8 years (building the largest national debt
in the industrialized world). Their economy remained stagnant and their per
capita income went from the second highest in the world to the tenth
highest.
[Source: QUICK FACTS ON THE DEMOCRAT STIMULUS PROPOSAL;
January 15, 2009]