Obama Stimulus Check

The early stimulus package from the Obama administration is just beginning to gather questions and criticisms. Although President Barack Obama already mentioned that the package includes health and infrastructure projects, the Senate and the House leaders are now wondering if there are tax projects include in the bill. Many others are wondering if Obama will be paying out a stimulus check. However, many are worried that it would be easier for the corporate lobbyists to have an answered wish list even though it is not their business to ensure that United States will recover its momentum again.

According to Nancy Pelosi, the speaker of the U.S. House of Representatives, she thinks that a stimulus package worth $600 billion is essential. Moreover, one-third of the said package must be used in tax provisions to provide people with an Obama stimulus check. On the other hand, Max Baucus, the finance committee chair, suggested that the package must be worth $700 billion. He thinks that at least half of it must be used for tax programs.

Both ideas by these respected people would cut the rates for some sectors, industries, and even the board for several corporations. In essence resulting in a corporate stimulus check. Moreover, it would also affect the bonus depreciation at the same time. According to the Center on Budget and Policy Priorities, they looked at the provisions of the bonus depreciation just like in last September’s stimulus. They also concluded that the tax cut on the bonus depreciation may not provide the economy an effective stimulus.

Almost all economists agree that any Obama Stimulus Check coming as a result of the economic stimulus package will not result in an effective stimulus. Moreover, this economic stimulus only rewards the taxpayers for all the activities as well as decisions that have already been made.

Remember the tax cuts and stimulus check during the Bush administration? It was actually touted as the country’s way to stimulate the economy. Unfortunately, many think that the said tax cuts and stimulus payment did not do much in ensuring the growth of the country’s economy. As a matter of fact, analysts are actually wondering if these huge tax cuts are one of the major reasons why the United States is experiencing recession today.

Continued from Economic Myths Part 1

For example, twelve US economists calculated that the inflation rate had been overstated for the past twenty years or more, with revised rates ranging from 0.4 per cent a year to 1.8 per cent. W. Michael Cox and Richard Alm averaged the results out to 1.1 per cent a year with the result that the alleged fall in real wages is transformed into a 12 per cent rise from 1978 to 1995. This is not huge — but it’s not a fall either. Moreover, it needs to be acknowledged that a great deal of the increase in wage rates has been taken in the form of fringe benefits. If these benefits had been paid as money wages then the 12 per cent real wage increase would have been even higher. This can only mean that productivity has been greater than previously thought.

But, as we all know, these are just statistics, and statistics can be made to tell any story, which amounts to calling these economists liars. However, it should be obvious, except to the idiotic, that if real wages rates had been falling then Americans would have had to work longer hours to maintain their level of consumption. In fact, annual working hours have been steadily declining since 1870. They stood at 1,570 in 1996 compared with 1,743 in 1973 and 1,584 in 1990. The Bureau of Labor Statistics’ Current Population Survey (CPS) estimated that weekly working hours had dropped from an average of 40 hours in 1967 to 39.2 hours by 1998. (Confusion on this matter has occurred because proper account has not always been taken of the increased participation rate of woman which was accompanied by a rise in their working hours).

Anyway, to state, as did my deep thinking critic, that because Americans “work more than four hundred hours a year more than their German counterparts” is to misconstrue the so-called problem. What matters is not how many hours Americans work compared with Germans or any other nationality but how many hours are needed to purchase goods compared with previous periods. If American wages have been falling then hourly purchasing power should have also fallen.

Cox and Alm have done a number of calculations that demonstrate that hourly purchasing power has been increasing, not falling. In addition, this is fully supported by consumer statistics that show a significant increase in living standards since 1973. One will find these detailed in Myths of Rich and Poor by Cox and Alm.

Continued with Economic Myths Part 3

The stimulus package that has just been signed by the president of United States is the current buzz all around the world. Because The United States is considered the most powerful economy in the world, even non-Americans are curious and keep up to date with the latest news about the stimulus package. However, there are still some people who do not seem to fully grasp what the package is all about. All they know is that it is supposed to help the U.S economy, which will theoretically then help the world economy.

Everybody knows for a fact that the stimulus package will benefit all sectors of the economy. The poor and the low-waged earners of America are waiting for this financial aid and are keen to see if there will be an Obama Stimulus Check arriving in their mailbox. Already known, is that there will more than 30 million worth of food stamps that will be given away to the poor. On the other hand, low-wage earners will not get cold cash from the stimulus package. Instead, there will be more tax programs that would financially aid them. Aside from that, there will also be more health care programs and $87 billion worth of Medicaid that can be used by the needy families.

The Obama stimulus package will also help schools, with the higher education/colleges being particular beneficiaries. At least $8 billion will be allocated to the infrastructure and modernization of different schools as well as colleges. Moreover, $54 billion will be set for preventing budget cuts in various states of the country. Meanwhile, there will be an increase in the Pell Grant for the college students working part-time to pay for their tuition fee. Rising from $4,731, it will become $5,350 in July 2009. And by 2011, the Pell Grant will be $5,550. The tuition fee tax credit will also be refundable by as much as 40 percent. It should be a big help to families as they will get at least $1,000 towards tuition.

Homeowners are also hoping to get a lower bill when it comes to their energy consumption. The stimulus package includes $42 billion worth of funds for investments targeting this sector. At least $20 billion will be used for energy efficiency, creating solar panels, and wind turbines. On the other hand, there will be $90 billion worth of funds allocated for repairing the country’s infrastructure including the highways, bridges, and waterlines. However, some economists disagree that it would help in adding more job opportunities or even boost the economy.

President Obama mentioned before being elected that the U.S must pay attention to the environment and his administration will also work on preventing global warming. The Environmental Protection Agency and the Interior Department will get $9.2 billion to be spent on environmental projects. It will also be used to create national parks, provide cleaner water, and maintain the wildlife refuges. Most of the funds will be used to clean the areas with gas leaks and other sites in America with hazardous waste.