I have been receiving many request from folks regarding the new proposed stimulus package and its impact on the economy.

Many are worried about the impact of injecting another trillion dollars in the economy and the impact of inflation in the next 2 to 3 years.

Lets not waste anymore time and lets find out where the money is going…

President Obama’s proposed economic stimulus plan has cleared the first hurdle on its way to becoming law. The package – worth an estimated $819 billion in its current form – was passed 244-188 by the House of Representatives on January 29, 2009, with a few modifications here and there. That was the easy part of the process. Now the stimulus plan goes to the Senate to be debated, added to, subtracted from, and then voted on.

The exercise started February 2 and should, if all goes relatively smoothly, be concluded by President’s Day, February 16. That would be pretty fast by Washington standards, but given the general consensus that the stimulus plan is extraordinarily urgent, we could well see some extraordinarily fast action from the Senate floor.

That said, there is no shortage of sticking points in the new administration’s proposed stimulus package. It is telling that not a single House Republican voted in favor of the plan on January 29. In broad terms, Republicans want more tax cuts and a greater focus on the problem of housing and bad mortgages than the current plan provides. Some experts have expressed disappointment about the relatively low level of spending on mass transit networks and other transportation projects, which would have substantial long-term benefits for local economies.

More alarmingly, many economists believe that the package is too small – even at $819 billion, or the equivalent of a quarter of the federal budget – to have any real impact on the ever-worsening economy, which shed 2.6 million jobs in 2008. Considering how hard it is to measure exactly how much good each component of

the stimulus package will do, and how quickly, it would be better to spend too much than too little, they say.

It will be impossible to please everyone, of course. The final plan will undoubtedly be a compromise on many counts, and some elements of it are sure to be less than perfect. However, with the economy worsening by the day, it does need to be passed and implemented quickly to slow the pace of job losses, increase economic activity and raise confidence in the US economy.

So what does the stimulus package consist of? Figures and other details are fluid, but here is a brief rundown of the current makeup:

Payroll tax cuts and other reductions to taxes paid by individuals, totaling around $215 billion

Around $604 billion of spending on infrastructure projects, increased unemployment benefits, education programs, aid to state governments, and others. To include:

• Unemployment benefit increase of $25 a week, and extensions of up to 33 weeks. This will cost an estimated $43 billion over two years
• Increased food stamp payments of up to $79 a month per family of four. This will cost $20 billion over five years
• $30 billion for highway construction
• $20 billion for school renovations
• Other infrastructure projects
• Computerizing medical records
• Renovating government buildings to make them more energy-efficient
• Increased aid to states, to include a $79bn state fiscal stabilization fund
• $87bn for increasing federal contributions to Medicaid
• Education spending of over $140 billion
• $25 billion in alternative energy spending

The stimulus measures will be financed in part by cutting wasteful programs and other government spending, and in part by increasing the already ballooning budget deficit. In the longer term, however, taxpayers will end up bearing an unspecified portion of the cost once the crisis has been dealt with.

I believe the economy needs a boost and strongly believe in rerouting wasteful spending into more useful programs but the reality remains we could have done so for a while now and still havent done so. Will there really be oversight? Accountability? Only time will tell.

Related posts:

1. Reality of Obama
2. Where Did The Bailout Money Go?
3. Obama’s Stimulus Bill and The Hidden Pork
4. Stimulus Plan Incentives to Increase Consumer Confidence
5. How To Stay Positive in This Economy