Economic Stimulus Act of 2008

hmoroz — Thu, 07 Feb 2008 17:35:58 -0500

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Number of senior citizens who would receive tax rebates under this bill but not the House stimulus bill, according to the Senate Majority Leader: 21.5 million

Approximate number of workers nationwide projected to run out of unemployment benefits before finding work in the first six months of 2008 unless benefits are extended: 1.3 million

Amount of stimulus produced for every $1 spent on extending emergency federal unemployment insurance benefits: $1.64

Amount of stimulus produced for every $1 in tax cuts targeted to low-income households: $1.19

Amount of stimulus produced for every $1 in tax cuts provided through a business investment write off policy: $0.24

Number of different stimulus policies implemented under President Bush that were more effective per public dollar than business investment incentives, according to an Economy.com study: 7

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. There is increasing evidence that the economy faces a high risk of recession which could throw millions of middle-class Americans out of work, reduce income and health insurance coverage, and increase poverty. A smart economic stimulus plan could prevent the downturn or soften its effects, but not just any stimulus package will do. To be effective, an economic stimulus package must direct money to those who will spend it quickly, boosting consumer demand and prompting increased production and economic growth. This Senate bill provides even more effective stimulus than the House legislation because the tax rebates are even more closely targeted to cash-strapped middle-class and aspiring middle-class Americans, who are more likely than wealthier people to spend the money they receive immediately, rather than saving it. The inclusion of seniors living on Social Security and veterans living on disability benefits is important for the same reason: not only is it an issue of basic fairness to include these groups but, because they are likely to spend the money quickly, their inclusion compounds the stimulative impact.

The extension of unemployment benefits and the expansion of funding for low-income heating assistance are extremely positive additions to the bill. Unemployment benefits provide direct assistance to the current and aspiring middle-class Americans likely to be hardest hit by an economic downturn while also providing the most cost-effective boost to the economy. Unemployment is already on the rise and it takes longer to find work during an economic downturn when jobs are scarce. People who are out of work tend to spend nearly all of the money they receive in government benefits very quickly, so unemployment benefits provide the quick jolt to consumer spending that the economy needs. What’s more, extending unemployment benefits is one of the most effective stimulus measures yet conceived, providing $1.64 in stimulus for every dollar spent. Meanwhile home heating assistance eases the burden on current and aspiring middle-class families trying to pay high energy bills, freeing up cash that can be spent on other necessities.

The renewable energy tax incentives in the bill are not likely to be effective as short-term economic stimulus, but do represent an important investment in the nation’s energy future. Meanwhile, the business tax cuts, a product of negotiation between the Bush Administration and Congress, are less positive for the middle class because they provide little stimulative effect but deprive the public of significant revenue and increase deficits. Offering tax incentives for business investment frequently fails to generate substantial economic growth because many businesses use the tax cuts for investments they planned to undertake anyway, costing the public lost revenue but creating no additional economic activity. Another drawback is that it takes considerable time for businesses to make new investments and for investments to result in increased employment or purchasing. Yet to be most effective, economic stimulus should have a rapid impact on the economy. Finally, the Center on Budget and Policy Priorities points out that business incentives harm state budgets, since state and federal tax codes are linked. Many states are already facing a revenue crunch due to the economic downturn and, unlike the federal government, cannot run budget deficits. The result could be cuts in state and local services that middle-class Americans rely on, from education to road maintenance to public safety.

Quotes from Experts

Beyond this Bill

Additional Resources

“Senate Finance Committee Measure More Effective As Stimulus Than House Bill, Despite Some Problems,” from the Center for Budget and Policy Priorities

“Strategy for Economic Rebound: Smart Stimulus to Counteract the Economic Slowdown,” from the Economic Policy Institute

“Options for Responding to Short-Term Economic Weakness,” from the Congressional Budget Office

Sense of the Senate in Support of Social Security of 2005

atraub — Mon, 24 Sep 2007 14:24:12 -0400

Legislation

The middle class

Supports

Video Summary

Injustice Facts

Proportion of current retirees who get half or more of their current income from Social Security: 2 out of 3
Weeks after his second inauguration that President Bush began touring the country to promote the privatization of Social Security: 2
Number of days after the cross-country tour began that the president finally unveiled the specifics of the plan: 84
Percentage by which President Bush’s Social Security plan would have reduced guaranteed benefits to the average worker now in their twenties: 16
Percentage of young workers not participating in any retirement plan at work: 80
Percentage of Americans who approved of the way President Bush was handling Social Security in June 2005 after they had learned more about his plan: 25

Overview/Summary

Middle Class Position Analysis

The Middle Class Supports. Social Security has long been a mainstay of the American middle class. At a time when many middle-class jobs are forcing employees to assume more individual risk in their retirement with a shift away from traditional pensions and toward 401(k) style-plans, Social Security continues to provide a modicum of genuine retirement security, guaranteeing fixed benefits whatever the state of the stock market. This security was endangered when, in the name of bolstering Social Security’s solvency, President Bush proposed a privatization plan that over time would have required benefit cuts of 28 percent and increased the federal debt by $17.7 trillion. The president’s plan to privatize Social Security was among the most controversial and intensely debated issues of 2005, but by year’s end, this resolution was the only Social Security proposal to actually come to a vote in either chamber of Congress. While the resolution was non-binding, it was widely regarded as an indicator of the Senate’s level of support for President Bush’s debt-boosting, benefit-slashing plan.

Social Security

Economic Stimulus Act of 2008

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources

Sense of the Senate in Support of Social Security of 2005

Legislation

The middle class

Video Summary

Injustice Facts

Overview/Summary

Middle Class Position Analysis

Related Blog: Header

Quotes from Experts

Related Blog: Text

Beyond this Bill

Related Blog: Link

Additional Resources