Special Report First 100 Days
Stimulus: What you need to know
The plan by Obama and congressional Democrats to revive the economy is taking shape. Here's what we know so far.
By David Goldman, CNNMoney.com staff writer
Last Updated: February 2, 2009: 3:17 PM ET
money.cnn.com
NEW YORK (CNNMoney.com) -- The House passed its $819 billion version of the economic stimulus package last week. Now it's the Senate's turn.
The near-$900 billion package the Senate will debate and likely vote on this week is very similar to the House bill. There are a few key differences: The Senate bill adds $70 billion in Alternative Minimum Tax relief for working families and $17 billion to provide a $300 payment to seniors, disabled people and others who can't work. It also would suspend taxes on unemployment benefits.
And those are just some of the differences between the Senate and House bills, and their number is likely to increase as the the Senate takes up numerous amendments, including proposals to expand infrastructure spending, lock in low mortgage rates and expand a homebuyers' tax credit.
What are some of the headline proposals, and what is the debate all about? The legislation is a work in progress, but here is an overview.
Infrastructure
The case for it: By investing in renewable energy, health care, education and construction projects, the Obama administration expects to save or create between 3 million and 4 million jobs and address key sustainability issues.
The case against it: Opponents argue the spending will lead to a rapidly increasing and unsustainable deficit. They also say that a majority of infrastructure projects will take too long to implement.
Construction projects: $90 billion. Fund the rebuilding of crumbling roads and bridges, build clean water and flood-control mechanisms and provide funding for mass-transit systems.
Education: $142 billion. Rebuild thousands of schools by modernizing classrooms, labs and libraries.
Renewable energy: $54 billion. Double production of alternative energy in the next three years. Weatherize low-income homes, modernize 75% of federal buildings and update the nation's electrical grid with a new, cost-efficient "smart" grid.
Health-care records: $20 billion. Modernize the health care system by computerizing all of the nations' medical records in the next five years.
Broadband access: $6 billion-$9 billion. Expand broadband Internet access in rural and underserved areas.
State relief
The case for it: As states face budget shortfalls, the stimulus plan seeks to help states pay for Medicaid and unemployment benefits. State fiscal relief will be allocated to prevent increases in state and local taxes, or cuts in government services.
The case against it: Opponents say the bill should focus on job creation that will make an immediate impact the economy.
Medicaid: $87 billion. Increase Federal Medicaid Assistance Percentage so states do not have to cut eligibility for Medicaid due to budget shortfalls.
Law enforcement: $4 billion for states and municipalities for law enforcement.
Safety net
The case for it: Obama proposed temporary programs to protect those most vulnerable to the effects of the recession.
The case against it: As with state budget relief, opponents say the bill is too big and should simply aim to create new jobs. Some lawmakers have said some of the "safety net" spending provisions are wasteful, and many have called the bill unfocused.
Unemployment benefits: $43 billion. Extend through December 2009 emergency unemployment insurance assistance to states. Increase weekly unemployment benefits by $25, and provide incentives for states to expand unemployment coverage. The Senate Finance proposal also includes a $4.7 billion measure that would temporarily suspend the taxation of unemployment benefits.
Cobra: $26 billion-$30 billion. Help for recently laid-off employees to pay for discounted health care.
Feeding the hungry: $20 billion. Increase food stamp benefits by 13%, and provide support for food banks, school lunch programs and WIC.
Tax cuts for individuals
The case for it: Throughout his campaign, the president pushed for tax cuts for low- and middle-income families. As a form of stimulus, tax breaks have the added advantage of being paid out faster than other provisions in the bill, and economists say those income groups are most likely to spend rather than save the money.
The case against it: Opponents say the size of tax cuts for both individuals and businesses do not go far enough and don't make up a big enough portion of the entire package. Furthermore, they oppose giving tax breaks to people who get back more money from the government than they pay in income and payroll taxes.
Middle-class tax cut: $145 billion. Tax cut amounting to $500 a year for individual workers and $1,000 for two-earner couples. The full credit would be limited to those making $75,000 or less ($150,000 or less for workers filing joint returns).
Tax cut for Social Security and disability recipients: $17 billion. The Senate version includes a $300 one-time payment to people who cannot work or are too old to work, including disabled or retired people receiving Social Security payments. The provision is not in the House legislation.
Low-income tax cut: $5 billion. Expand the Earned Income Tax Credit, which is a refundable credit for low-income workers. Furthermore, the Make Work Pay Credit would be refundable, meaning that even tax filers without any tax liability -- typically very low-income workers - would receive one.
Child tax credit: Up to $18 billion. Temporarily increase the amount of the child tax-credit that would be refundable. The Senate's increase is smaller, costing $8 billion less than the House version.
Alternative Minimum Tax: $70 billion. The Senate bill would protect middle- and upper middle-income taxpayers from the AMT, which was intended primarily for high-income taxpayers. But in recent years it has threatened to engulf those lower down the income scale. That provision was not in the House bill.
Tax cuts for businesses
The case for it: Obama's plan seeks to help ease the tax burden for small businesses, as well as allow companies suffering losses to get some tax relief by applying losses to more years in which they booked a profit.
The case against it: Opponents say too small of a percentage of the total package goes to business tax breaks.
Small business write-offs: Obama would increase the amount of expenses small businesses can write off to $250,000 in 2009 and 2010 from the current $125,000 level.
Tax cuts for companies suffering losses: Up to $17 billion over 10 years. Obama would temporarily broaden the "net-operating loss carryback" to five years, up from two years currently. The provision would let companies apply their 2008 and 2009 losses to past and future tax bills so they can get money back on taxes they've already paid or would otherwise have to pay. The Senate allows 100% of those losses to be carried back, and the House allows for 90%.
Energy tax break: The Senate proposal includes an $11 billion measure to make it easier for businesses to claim valuable tax credits for investing in energy. The House bill does not include this proposal.
First Published: February 2, 2009: 1:34 PM ET |
