Stimulus Compromise Put To Reality Check

Thursday, February 12th 2009, 4:30 pm
By: News On 6

By Craig Day, The News On 6

UNDATED -- Just what are the specifics of the massive compromise plan?   The News On 6 takes a closer look at what you, your kids and likely your grandkids will be paying for in a Reality Check.

After weeks of deadlock on Capitol Hill, lawmakers worked out a $789 billion compromise version of President Barak Obama's economic recovery plan.

So where is your money going? 

First, in terms of spending, $40 billion will go to extend unemployment benefits, $20 billion for food stamps, $3 billion in temporary welfare payments, $14 billion will be used to give onetime $250 payments to people getting social security benefits and disabled veterans.  Another $21 billion will subsidize health coverage for the uninsured; $87 billion will help states with Medicaid.  And, $19 billion will be used to modernize health information technology systems.

With all that talk about infrastructure wish lists, just $46 billion will go for transportation projects.  Of that, $27 billion is for highway and bridge construction and repair.

There's also $50 billion for energy programs, focused chiefly on efficiency and renewable energy.         

Money is also going to homeland security mainly for airport screening equipment and $4 billion to police departments to hire officers and buy equipment.

The plan also includes tax credits.

Most people will get a $400 tax break or $800 dollars per couple which basically means you'd have $13 less withheld from each paycheck starting in June.  If you make more than $75,000 or $150,000 as a couple, you'll get less.

But millions of Americans who don't make enough money to pay any federal income taxes at all will also receive checks.

Another $13 billion will provide a $2,500 tax credit for college tuition and expenses.  Also, $2.5 billion will be used to make sales tax purchased on a new car tax deductible.

From the AP, more details:

The $500-per-worker credit for lower- and middle-income taxpayers that Obama outlined during his presidential campaign was scaled back to $400 during bargaining by the Democratic-controlled Congress and White House.

Couples would receive $800 instead of $1,000.   Over two years, that move would pump about $25 billion less into the economy than had been previously planned.

Officials estimated it would mean about $13 a week more in people's paychecks this year when withholding tables are adjusted in late spring.

Next year, the measure could yield workers about $8 a week.

Critics say that's unlikely to do much to boost consumption.

"The most highly touted tax cut in the original proposal now translates into $7.70 a week for middle-class workers," said Senate GOP Leader Mitch McConnell of Kentucky.

Millions of people receiving Social Security benefits would get a one-time payment of $250 under the agreement, along with veterans receiving pensions, and poor people receiving Supplemental Security Income payments.

An additional $46 billion would go to transportation projects such as highway, bridge and mass transit construction; many lawmakers wanted more.

Brendan Daly, spokesman for Speaker Nancy Pelosi, D-Calif., and Don Stewart, an aide to McConnell, said final votes are likely in the House and Senate on Friday. 

The Obama plan offers a 60 percent subsidy to help unemployed people pay health insurance premiums under the COBRA program and divvies up $87 billion among the states to help them with their Medicaid costs for the next two years.

It provides $19 billion to modernize health information technology systems, even though such funding will create few jobs right away.

To tamp down costs, several tax provisions were dropped or sharply cut back.

A provision popular with Republicans and the big business lobby that would have awarded about $54 billion to money-losing businesses over the next two years was instead limited to small businesses, greatly reducing its cost.

A $15,000 tax credit for anybody buying a home over the next year was dropped; instead, first-time homebuyers could claim an $8,000 credit for homes bought by the end of August.

Car buyers could deduct the sales tax they paid on a new car but not the interest on their car loans.

But nothing could shake negotiators from insisting on including $70 billion to shelter middle- to upper-income taxpayers from the alternative minimum tax, originally passed a generation ago to make sure the super-rich didn't avoid taxes.

The move is aimed at easing political and logistical headaches for lawmakers who wanted to do the so-called AMT "patch" now rather than later.

The Congressional Budget Office estimates that provision will have relatively little impact on the economy.

In late-stage talks, Obama and Senate Majority Leader Harry Reid, D-Nev., pressed for $8 billion to construct high-speed rail lines, quadrupling the amount in the bill that passed the Senate on Tuesday.

Reid's office issued a statement noting that a proposed Los Angeles-to-Las Vegas rail might get a big chunk of the money. 

Scaling back the bill to levels lower than either the $838 billion Senate measure or the original $820 billion House-passed measure caused grumbling among liberal Democrats, who described the cutbacks as a concession to the moderates, particularly Sen. Arlen Specter, R-Pa., who are feeling heat from constituents for supporting the bill.

Specter played an active role, however, in making sure $10 billion for the National Institutes of Health, a pet priority, wasn't cut back.

After final agreements were sealed Wednesday afternoon, staff aides worked into the night drafting and double-checking in hopes of officially unveiling the measure Thursday.