The Lowdown on Barack Obama's Stimulus Package
United States President Barack Obama's stimulus package is formally known as the American Recovery and Reinvestment Act of 2009. The various measures in the plan pledged more than $787 billion in tax cuts, unemployment benefits, and other provisions aimed at helping those affected by the recession and economic downturn get by. Basically, the plan hopes to increase spending on aid to states that are having difficulties in their own budgets and also on infrastructures.
With the United States experiencing its most severe downturn in recent years, the stimulus packages hoped to lessen the impact of the downturn on businesses and states, avoiding closures, cut-backs and lay-offs. It also hoped to hasten recovery. The U.S. Congressional Budget Office relates that most of the money will be spent next year. In fact, according to the Recovery.gov Web site, only $179 billion of the total amount promised to have been allocated and merely a third of that has been spent. Much of the money will be allocated and subsequently spent in 2010 when the effects of the downturn are most likely to linger.
The stimulus plan encourages people to spend, as evidenced by the enormous and wide tax cuts it includes. Employees would see a $500 reduction in their taxes while those who are unemployed can look forward to expanded unemployment benefits, healthcare benefits and food stamp benefits. It will also fund school improvements, educational loans, as well as tax credits for college students.
In healthcare, the stimulus plan will bring in more than $5 billion in preventive care programs and community health center improvements. It will also pour $6 billion to help homeowners save up on energy costs via tax credits on conservation measures and replacement of old appliances. An allotment of $5 million will help families with mortgages.
Indeed, Obama's stimulus package attempts to become the most comprehensive plan in recent years. And it has so far been successful in increasing the country's GDP. However, the plan is not without detractors. A lot of criticism has been thrown against it. One of these contends that the plan increases the budget deficit that the U.S. has. The plan will be paid for by debt. Another criticism says that all the measures are temporary. In fact, some economists have voiced out their negative opinions, saying that the package will not help the country's economy at all. The Congressional Budget Office has released a study showing that the package will, in fact, hurt the economy in the long run.
Most people, however, agree that an aggressive and sizable plan was needed to soften the effects of the downturn. President Obama has been lauded for his move to achieve this and still avoid creating further doubts about the country's debt position.
Is the plan working? So far, it has been able to inch its way to its goal, which is to encourage consumer spending while cushioning the impact of the downturn on those who are directly affected by it – specifically those who are laid off, those who are losing their homes, and those who are running small businesses. The package is helping to create jobs, which in turn stirs up consumer spending.
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