What is Purpose of the 2009 Stimulus Bill?
Seven Distinct Goals can be Identified in the Stimulus Bill
Looking at the spending and tax cut proposals in the 2009 economic stimulus bill passed by the US House on January 28, 2009, eight different goals can be identified.
Create Jobs
Forty-seven billion dollars is authorized for infrastructure. This includes building, or repairing, roads, bridges, schools, and electrical grids. Since workers would need to be hired for these projects, it would create more jobs.
Offset State Losses
Some of the spending may not create jobs, but would prevent further job loss in state and local governments. The aid to states, such as $79 billion for a state fiscal stabilization fund, has this goal in mind. Since state governments are more limited than the federal government in how much money they can borrow, the economic crisis will force them to make major cuts in their workforce without any federal aid.
Increase Consumer Spending
Some of the provisions are aimed at putting more money into consumer’s pockets in the hopes that they will spend the money and get the economy going. A $500 tax rebate for workers would serve this goal.
Spend Money to Save Money
The stimulus bill is not being paid for with tax increases, so, all this new spending will be added to our national debt. This debt is currently above $10.5 trillion and we are expected to add another $1 trillion this fiscal year alone. One of the goals, therefore, is to spend money that will help us save money in the long run so we are in a better position to repay the debt. Some of the infrastructure spending would accomplish this. Since you get better gas mileage on a newly paved road than a road in disrepair, infrastructure spending will save energy costs. Additionally, the $20 billion appropriated to improve health information technology would help reduce the cost of health care.
Help Those Hurt by the Economy
Another goal is to help those most hurt by the economy. This goal is served by extending unemployment benefits and increasing the amount of benefits. Those on unemployment would also be eligible for Medicaid, a federal health insurance program normally reserved for the poor. Additionally, there is an increase in food stamp benefits. A family of four on food stamps would receive an extra $79 a month.
Advance an Ideological Agenda
Some see this stimulus bill as an opportunity to fulfill campaign promises and bring big changes to Washington. Rahm Emanuel, the White House chief of staff, said that “you never want a serious crisis to go to waste.” Normally, big changes in government only happen during crises. The New Deal occurred because of the Great Depression, for instance. Emanuel is saying that he wants to use the current crisis to help further the goals of the president. This goal can be seen in the stimulus bill’s expansion of Medicaid, and high speed Internet access to rural areas. Not surprisingly, it is this goal that Republicans find most objectionable.
Impact the Economy Soon
Since the economy is in dire straights, another goal is to forge a bill that will go to work quickly. The quickest way to get money back into the economy is through tax cuts. The only problem with tax cuts is that there is no guarantee that the money will be spent. It may be saved or used to pay down debt. Government spending impacts the economy more directly, but most of this spending cannot be done quickly.
For more information on what is in the stimulus bill, see this excellent graph at the Washington Post website detailing the spending items and when they would be spent, or read David Leonhardt’s January 27, 2009 piece in the New York Times, “The Big Fix.”
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