If the stimulus plan fails all the blame will fall on the Democrats and Obama. This is what the Republicans want. Obama is being set up for the fall. Now he can no longer just blame Bush. He, and the Dems, will get the blame for whatever happens from now on. The stock market has already spoken. They don't like it. Despite the Obama rhetoric to the contrary, we are now more divided than ever. And it is very dubious whether the plan will work:
Less than one month after President Obama took office, Congress passed his flagship proposal Friday night, an unprecedented collection of tax cuts and new spending that Democrats say offers the country its best hope to fight the worst economic crisis since the Great Depression.
After a frenzied month of legislating, the House and Senate produced an economic stimulus bill estimated Friday to cost $787 billion, combining tax cuts with one-time spending on infrastructure investments, expanded unemployment benefits and other programs.
It passed both chambers on a largely party-line vote, winning the support of no Republicans in the House and only three in the Senate.
The outcome amounted to the first significant fruits of November's Democratic victory, in which Obama handily won the presidency while his party expanded its congressional majorities. For the first time in 14 years, Democrats have the power to legislate without serious Republican interference, and Friday they reveled in what many described as a new dawn for liberalism.
Democrats claimed a mandate to beef up the federal government's role in areas including transportation, alternative energy and school construction - and to take on whopping deficits to do so - citing a shift in popular opinion provoked by some of the most vexing domestic problems the country has encountered in decades.
[...]Although the dimensions of the final bill closely match a template presented by Obama after his election, the particulars were drafted by House Democratic leaders at the direction of Speaker Nancy Pelosi, D-San Francisco, who invoked special rules to streamline its passage to a final vote.
Many Republicans described the 1,071-page bill as an act of "generational theft" that would dangerously increase federal deficits, saying Pelosi's maneuvers had limited their ability to influence its contents. The fact that Obama was able to enact such a sweeping expansion of government's role with little of their cooperation betrayed much of his campaign-year rhetoric about seeking bipartisan consensus, several said.
Here is some idea of how this bill will affect you directly. It is unclear how all this will stimulate the economy:
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.
You can forget universal health coverage:
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.
Why isn't there more going into infrastructure? Which is what is really needed to get the economy going again. It is also essential if we are to survive. America is crumbling. This is another problem with stimulus plan:
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.
One thing is for sure, the plan will lead to a skyrocketing deficit and debt. This means more borrowing from Communist China. Not a good thing:
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.