Tuesday, February 3, 2009

More on the Stimulus Package and new Bills

So what does this all look like?

from Financial E news

THOUGHT PROCESS - Here is a hint to the thought process behind the economic stimulus package from the "second most powerful person in America"...the President's Chief of Staff, Rahm Emanuel:
"You never want a serious crisis to go to waste. What I mean by that is it's an opportunity to do things that you think you could not do before. This is an opportunity. What used to be long-term problems -- be they in the health care area, energy area, education area, fiscal area, tax area, regulatory reform area -- things that we had postponed for too long that were long-term are now immediate and must be dealt with. And this crisis provides the opportunity for us, as I would say, the opportunity to do things that you could not do before."

- Where do we get the money to do this? Just print more? Spending-stimulus advocates claim that government can "inject" new money into the economy, increasing demand and therefore production. This raises the obvious question: Where does the government acquire the money it pumps into the economy? Congress does not have a vault of money waiting to be distributed. Therefore, every dollar Congress "injects" into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another.

HOW MUCH IS $1.2 TRILLION? - "All sides agree the plan carries a hefty price tag: It will be paid for with borrowed funds and could swell an already mammoth $1.2 trillion deficit forecast for this year to more than $2 trillion." Well, it is hard to get your arms around, but $1.2 trillion is enough to pay $4,000 to every man, woman and child in the U.S.

- The stimulus legislation currently offers a payroll tax cut of $500 to individuals who earn less than $75,000 a year, and a $1,000 credit to married couples who earn less than $150,000 a year. Since many of the people who would be eligible pay no income taxes, a cynic might dub part of the cuts as welfare. The final version may also include an AMT "fix," at least for 2009.

SCHIP PROGRAM - Both the House and Senate have passed H.R. 2, the Children's Health Insurance Program Reauthorization Act of 2009, legislation supported by the President. Funded by an increase in the federal tobacco tax, the bill authorizes the expenditure of $32 billion over the next 4 years to expand the State Children's Health Insurance Program to an estimated 11 million children from 7 million today.

If you do the math - that is 3,000 per child in federal monies, plus matching state funds

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