Details of Proposed Economic Stimulus Bill
January 24th, 2008 | by MB |
Photo: Susan Walsh, AP
UPDATE: The House and Senate have passed the final version of the Stimulus Bill. You can read the details in this post: Details on Final Stimulus Bill.
Congress and President Bush appear to have made a final agreement on the contents of the forthcoming economic stimulus bill.
Highlights:
- Tax rebates of at least $300 to anyone earning a paycheck, including low income earners that pay little to no income tax.
- Families with children would receive an additional $300 per child, capped at $1,200.
- Rebates would also only go to families with incomes less that $150,000, and individuals earning less than $75,000.
- New Business tax deductions including:
- Advantageous changes in depreciation of assets.
- Rule changes to allow small businesses to recovery previous taxes paid, if they are currently suffering losses.
- And here’s the really big one to me: Allow Fannie Mae and Freddie Mac to purchase home mortgages greater than their current limit of $417,000. This limit would be increased up to $700,000 in areas with the highest home prices. This would be great news for those living in areas with vary expensive real estate markets, as it should lower the cost of borrowing, and provide more liquidity.
Conclusion:
It looks like both sides compromised on this deal. The Democrats wanted to extend food stamps and unemployment benefits, while the Republicans did not want rebate checks going to individuals and families that didn’t pay income tax in the first place.
Personally, I’m very concerned about the costs. My understanding is that the budget deficit for 2008 is estimated to be $250 billion before the stimulus package. This agreement, in it’s current form is estimated to cost $140 billion. That means the US will need to borrow $390 billion this year to fund it’s spending. Oh, and don’t get me started on the unfunded Social Security or Medicare liabilities.
While I’m not an economist, I have to wonder from a common sense point of view, if it makes since for an individual, or a government, to continue to borrow from tomorrow, to pay for today.
One Response to “Details of Proposed Economic Stimulus Bill”
By Justin on Jan 29, 2008 | Reply
What about requiring the money to be spent for services in the US rather than goods? Goods may mean money going out of the US to other countries - services means the money stays here. Restaurants, auto repair, etc. Why are we bailing out businesses that “lose” money (are we talking real losses or paper losses due to buying Hummers and deducting the entire cost). So, I get to buy a Hummer, deduct the entire cost, lose money, get money from the government because my business looses money. Wow, isn’t this a country for the people and by the people? I want MY country back.