Obamanomics: A Breakdown of how President Obama Plans to Repair America’s Shattered Economy
By JAMES “BIRD” GUESS
Obamanomics: The Financial Breakdown of How President Barack Obama Plans to Repair America’s Shattered Economy
In an attempt to repair the economy and potentially create up to 3.5 million jobs, President Obama has proposed an economic stimulus plan that would cost taxpayers $825 billion. The House of Representatives recently approved the plan, and now it awaits a vote in the Senate. The terms will more than likely be negotiated and revised to satisfy both House and Senate politicians. President Obama is hoping to have a final version of the plan on his desk by mid-February so he can sign it into law and immediately start the spending spree.
Why does President Obama believe spending $825 billion will help repair the economy? Well, President Obama’s plan is based on an economic philosophy called “Keynesian economics,” which states when an economy is in a downturn and consumers are not spending, the government should spend money to make up for the decline and create jobs. The people who obtain these government sponsored jobs will spend the income they receive on other products and services, and in return help create more jobs and more spending. As a result of the increase in spending, businesses will create more jobs and hire people to produce additional products and services. The cycle continues, and the economy strengthens as these employees spend their income as well.
Roughly 60 percent of the $825 billion stimulus will be used for spending on education, infrastructure, energy, health care, aid to the poor and unemployment. The remaining 40 percent will be used to provide tax credits for payroll taxes, higher education and housing. These tax credits will reduce the total amount of taxes a person must pay, and are fully refundable if a person does not owe any taxes.
Below is an outline of how most of the $825 billion stimulus will be spent:
Tax Cuts = $275 billion
• Payroll tax credits will be provided, and an individual could receive a credit of $500 maximum, and a married couple $1,000 maximum. This particular tax credit will benefit working American families who make $75,000 or less.
• Higher education tax credit will be $2,500 for the first four years of college. It will replace the Hope and Lifetime Learning Credits.
• First time homebuyers credit will be 10 percent of the purchase price of the house with a maximum of $7,500. This particular credit will apply to homes purchased between April 8, 2008 and July 1, 2009, and is an interest free loan that must be repaid in equal payments over 15 years beginning the second year after the credit is received.
Education = $141.6 billion
• School districts will receive $62 billion through a variety of different programs to help upgrade school buildings and facilities.
• $39 billion will be allocated for State Governments who provide financial assistance to school districts, public colleges and universities to prevent reductions in educational services.
• $15.6 billion will be given to states for meeting educational performance initiatives.
• States will be able to access a $25 billion federal fund in hopes of preventing layoffs of public employees and teachers
Health care = $111.1 billion
• $87 billion will be used to help states pay for Medicaid, which provides health care for low-income residents
• $20 billion will be made available to computerize medical records and to prevent medical negligence
• $4.1 billion will be provided for preventive medical care
Financial aid for the poor and unemployed = $102 billion
• 43 billion will be made available to increase unemployment benefits and job training
• $39 billion will be provided for health insurance and Medicaid coverage for the unemployed
• $20 billion will be used to increase food-stamp benefits by 13%
Infrastructure = $90 billion
• $30 billion will be provided for highway construction projects
• $10 billion will be provided for rail and transit projects
• $31 billion will be provided to renovate federal and public buildings to meet energy efficient standards
• $19 billion will be provided for water projects
In conclusion, many have asked and continue to wonder if all the government spending and tax cuts will actually work and result in a stronger economy It appears it will take a few years before the majority of the stimulus trickles its way down through the economy, but it will still create jobs and restore much needed confidence in America’s shattered economy.
