January 24, 2008, 10 pm
President Bush and Congressional Democrats and Republicans have reached a tentative agreement on the fiscal stimulus plan according to the associated Press, CNN and the New York Times. The deal has to also go to the Senate where it may be tweaked somewhat but there is clearly a broad consensus emerging on the plan.
The plan would involve 150 $ billion of expenditures spread among several programs including tax rebates for those individuals and families earning under $75,000 and 150,000 dollars respectively as well as a $300 payment to those individuals who currently pay no tax but earn over $3000 a year.
The individuals would receive $600
couples $1200 and an additional $300 per child. Hence a qualifying couple with two children could receive as much as $1800 . The plan will be passed swiftly (we hope) through both the house and the Senate so that it can begin to be implemented within several weeks.
In addition to the income transfers which apparently account for 2/3 of the expenditures, the plan will also involve major incentives to business through accelerated depreciation , tax reductions and other incentives designed to get businesses to reinvest in the economy and job creation.
Some Democratic Senators like Edward Kennedy, Max Baucus and Chuck Schumer are calling for extensions to unemployment insurance in terms of extra weeks paid out and are also calling for income transfers to the poor through increased food stamp aid and housing benefits. Senator Clinton is calling for a moratorium on housing foreclosures while Senator Obama is asking that money be transferred to the states so that they can prevent cut backs in their social support payments and other benefits that target the poor. Senator Edwards is calling for a jobs related strategy that emphasizes improving unemployment coverage and benefits, promotes green energy efficient infrastructure investment and provides help for people facing foreclosures.
We shall see if any of these quite worthy suggestions get included in the package before it leaves the Senate. Michael Bloomberg and others are also wisely calling for an infrastructure program which is a capital works program that can be financed in a different way from the others including amortizing it over a much longer period. Again this would be a worthwhile program.
But the key thing is that the majority of the politicians accept the need for a deficit financed stimulus package combined with the interest rate cut by the Fed. America is on the right track toward mitigating the recession and promoting a swifter recovery.The amount hopefully will be sufficient, although it still might be too small to totally do the job, but the principle is now well established.
If need be more can be injected later. Both President Bush and Republican and Democratic members of the Congress deserve some credit for getting their act together swiftly. In Asia and Australia it is now afternoon and the markets are dramatically up - for the moment a good sign.
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