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It’s Not Just About the $400 Tax Credit

This article was written by in Economy. 13 comments.

When talking about the 790 billion dollar stimulus bill currently nearing the end of its congressional marathon, it’s tempting for people to focus on the direct, short-term benefits, namely a $400 tax credit, and how such a thing won’t go very far in benefiting most people.

I tend to agree, but I’m also the first to admit that I’m no economist, in fact I’ve never studied macro-economics, and everything I know about personal finance I’ve learned by making mistakes. In my case, an $800 tax credit (married, filing jointly) would go toward paying down the $6,000 IRS bill we were surprised with in 2008.

That tax credit is just one part of the American Recovery and Reinvestment Act (AKA stimulus bill, AKA stimulus package, AKA spending bill, AKA “pork-filled liberal wish list”). For those of us who are already struggling in the post-toxic asset economy, here are some other highlights that should, even if indirectly, help make life a little easier:

  • $4 billion for job training
  • one-time $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans receiving disability and pensions
  • my personal favorite: $7.2 billion to bring broadband Internet service to underserved areas
  • $24.7 billion to provide a 65 percent subsidy of health care insurance premiums for the unemployed under the COBRA program
  • $5 billion to weatherize modest-income homes
  • $11 billion toward a so-called “smart electricity grid” to reduce waste
  • $44.5 billion in aid to local school districts to prevent layoffs and cutbacks
  • $4 billion in grants to state and local law enforcement to hire officers and purchase equipment
  • About $70 billion to spare about 24 million taxpayers from being hit with the alternative minimum tax in 2009. The change would save a family of four an average of $2,300
  • About $14 billion to provide a $2,500 expanded tax credit for college tuition and related expenses for 2009 and 2010
  • $4.7 billion to expand the Earned Income Tax Credit for low-income families with three or more children
  • $6.6 billion to repeal a requirement that a $8,000 first-time home buyer tax credit be paid back over time for homes purchased from Jan. 1 to Nov. 30, unless the home is sold within three years

Those bullet points were pulled from this Associated Press story. Check out the whole list and see if anything else strikes your fancy. There are bound to be things in there you don’t agree with, but I’m personally proud of our Congress for managing a workable compromise in such a short amount of time.

It’s also important to pay attention to your state and local news to see how they’re planning on using the funds being offered. Try searching Google News for “stimulus bill” and your closest city.

Updated February 10, 2011 and originally published February 13, 2009.

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About the author

Smithee formerly lived primarily on credit cards and the good will of his friends. He is a newbie to personal finance but quickly learning from his past mistakes. You can follow him on Twitter, where his user name is @SmitheeConsumer. View all articles by .

{ 4 comments… read them below or add one }

avatar 1 Anonymous

Another place to see where stimulus funds *could* be spent is Stimulus watch does NOT list where funds will be spent, but lists candidates for funding.

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avatar 2 Anonymous

“but I’m personally proud of our Congress for managing a workable compromise in such a short amount of time.”

I’m going to have to contend this point here Smithee. I don’t think scratching the back of 3 senators in order to get the bill passed should be considered a great accomplishment. They compromised alright – they took a myopic short term approach in order to secure selfish agendas within this bill. The other side of the aisle was essentially shut out of the process. At no point was their alternative bill discussed (shot down in house). The bill signing was RUSHED, breaking several promises of the HOPE and CHANGE campaign, including posting of the bills online for the public to see, waiting 48 hours for a vote, etc., etc. I mean, they haven’t even read the bill and it has PENCILED in items. The only real compromise was between the DEMOCRATIC controlled House and DEMOCRATIC controlled Senate. I’ll spare the absolute power quote.

Sure, there are a lot of items in this bill that CAN be helpful for our country, but selling it as a cure for the recession is pure crap. This bill is a democratic elixir – a snake oil if you will, filled with expensive and expansive gov’t programs that will flip the US population into consumers rather than producers and KILL the very fabric of our country. What motivation will the voters have to go out and achieve when everything is handed to them? STIMULUS puts money in the pockets of producers and workers immediately. If you want to change lightbulbs and update doorbells, put that in a separate bill.

Not to mention that this is all BORROWED money. Who is going to pay it back? Certainly not those who are getting all these program benefits. it’s going to be our children and grandchildren. When I say “our” I mean those that pay taxes. The TRILLIONS of dollars this one single bill will kill the US Dollar.

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avatar 3 Anonymous

“but I’m personally proud of our Congress for managing a workable compromise in such a short amount of time.”

Proud is certainly not the word I would use.

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avatar 4 Anonymous

Well, i am not proud of anyone who voted in favor of this bill. I believe it is a federal power grab, buys the votes of lower income people by giving handouts (a refundable tax credit is CHARITY THAT IS GOVERNMENT DIRECTED, infringes on personal rights (see the 1st, 2nd and 4th amendments), intrudes into STATES RIGHTS (see the 9th and 10th amendments) and leaves future generations with an enormous TAX BILL THAT WILL HAVE TO BE PAID! yeah, that’s somthng to be proud of. and CHANGE we can believe in. the iraq war was way too expensive in american lives but as dollars go, it was pretty cheap.

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