Pelosi and the Democrats' Second Stimulus
Will Another Stimulus Pacakge Help The US Economy?
Oct 9, 2009
House Democrats, led by Nancy Pelosi, are working on increased spending measures designed to further aid the ailing U.S. economy. While they are not officially calling it a second stimulus package, the proposals have all of the makings of President Obama’s first stimulus package enacted February 17, 2009. According to an AP article, Proposals to create jobs add up to second stimulus, by Stephen Ohlemacher, “Taken together, the proposals look a lot like another economic stimulus package, though congressional leaders don't want to call it that.”
The Proposal
The programs being considered are a continuation, or expansion of present stimulus programs. Speaker Pelosi offered no details when she said she was considering asking for an extension of the tax credit for first time home buyers, and possibly including current home owners, reported Ohlemacher.
The AP story also states that another idea being considered is allowing businesses that lose money to get refunded for prior taxes paid up to five previous years. This Republican idea was dropped from the first stimulus package.
Additionally, Sen. Arlen Spector, D-Pa. proposed a tax credit for businesses that hired new personnel. A $4000.00 tax credit for each new employee hired would be paid to the business over the next two years following the hires.
A one time payment to social security recipients of $250.00 is also being considered. This payment would be funded by increasing payroll taxes on workers who make between $250,000 and $359,000 per year in 2010. Presently, the taxes only apply to the first $106,800 of a worker’s income, according to Ohlemacher.
The Cost
At the end of this second round of stimulus, the government will be left with a bill to pay. Estimates are that the increased benefits will cost approximately $65.1 billion dollars. This figure does not include the increased cost of the home owner’s tax credit. The total price tag would be added to the record budget deficit which currently stands at $1.4 trillion according to the latest figure from the Congressional Budget Office (CBO).
Will a Second Stimulus Work
Leading economic indicators show no signs of an improving economy. According to the Bureau of Labor Statistics the national unemployment rate rose to 9.8% as of October 2, 2009, and is continuing to trend upwards. The U.S. Census Bureau reports that new housing starts for August 2009 were 32.4 percent lower than they were for August 2008. Federal interest rates will be kept at, “rock bottom” according to New York Federal Reserve President William Dudley who was quoted in a Tuesday, October 6th Reuters story as reported by foxbusiness.com
It has been eight months since the first stimulus package was introduced. The U.S. economy has shown no signs of improving, and in some cases, like unemployment, has degraded. The Obama administration and congressional Democrats hold firm to their belief that the stimulus has kept the economy from becoming worse than it is, according to Ohlemacher’s report.
Sources:
apnews.myway.com
www.bls.gov
www.census.gov
www.foxbusiness.com
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