“Recovery won’t happen overnight, and it’s likely that things will get worse before they get better,” said President Obama in his weekly radio address. With the economy suffering, the American Recovery and Reinvestment Act of 2009 will create or save three to four million jobs over several years, according to Obama. The total cost of the bill is $787 billion, with $499 billion for federal spending and $288 billion for tax cuts to people and businesses.
The most debate lies where the money is divided between improving people’s paychecks and increasing federal spending. Tax cuts would improve incomes for individuals and businesses, while federal spending would improve the nation’s efficiency.
Federal spending will be distributed among direct aid to states, infrastructure projects, and job training. Direct aid to states would allow the government to help major industries prevent mass layoffs and maintain funding for critical state projects like welfare, healthcare, and housing projects.
The infrastructure projects target improving economic efficiency and ensures one of the hardest-hit job areas construction workers, will still have work opportunities – some projects include improvements to water, transportation, high speed internet in rural areas, and electricity systems. The bill also invests in alternative energy, computerization of healthcare technology, and school construction.
Tax cuts factor out to $400 per individual worker and $800 per working couple; annual incomes of less than $250,000 will not see any tax raises. Tax cuts are the more direct method, allowing people to receive money to hopefully spend immediately and allowing employers to retain more money to keep jobs (also potentially making the stock market more interested, driving up companies’ worth). Expected average pay increase should be $13 per week.
Initiatives like food stamps and unemployment benefits act as automatic stimuli themselves, considering the money goes to those who are highly likely to spend the money as soon as they receive it. Though these projects are part of the state funding side of the bill, they are virtually as directly beneficial as tax cuts; weekly unemployment benefits are expected to increase by $25, and food stamp benefits should increase by 13%.
Obama has appointed a former secret service agent, who exposed a lobbying corruption scandal in the Department of the Interior, to oversee spending. The government has also started the website recovery.gov to ensure transparency for allocation of the stimulus package.
The stimulus plan will be deployed in installments over several years to prevent inflation or economic shock, also making the public edgy about not getting enough money in enough time. President Obama seems to continue his campaign trail mantra of hope as a request to the public in this disturbing time.