Thursday, February 19, 2009

Stimulus Bill Breakdown

The Tulsa World newspaper concisely segmented the recently passed stimulus legislation. The breadth of coverage was instructive, with healthcare, education, food, transportation, energy and employment NOT being an exhaustive list. Key tax provisions included an extension of the Hope Credit to $2,500 per year, a new "Making Work Pay" credit with a similar outcome to the Bush rebate last year (except that the MWP credit has an income cap), another one-year patch for the AMT, expansion of the earned income and child care credits, deduction for state and local taxes paid on purchases of cars and small SUVs and trucks (wonder if there is a "buy North American" restriction here), temporary (?) exemption of some unemployment benefits from income tax and tax incentives for energy-efficient and renewable energy purchases (a return to the Carter-era energy credit?).

Obama clearly is counting on increased spending by lower-income Americans to pull the U. S. out of recession; and to be fair, there are numerous economists who would agree that propensity to spend is higher for low-income households, thus possibly triggering spending the U. S. out of recession. Thus recovery through the plan is possible; however, as I stated Tuesday, inflation is almost certain (watch out if you are on fixed income).


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