Yesterday, President Barack Obama signed the economic stimulus plan into law. Whether or not you agree with it, it’s pretty much a done deal. And whether it works or not, two main things will be remembered about the politics of the economic stimulus bill:
- Obama forced the Democrats to make concessions to the Republicans, even though they didn’t actually have to.
- Almost no Republican (none in the House) voted for the bill even after the concessions.
This means that GOP partisans will either be remembered as stubborn obstructionist fools or visionary principled heroes — depending on whether the American public thinks that this economic stimulus bill did the trick. You can start making your own assessment for your personal finances today. Here are some of the things that are most likely to affect you personally:
- Starting in June, most people will start to see around $13 a week in their paychecks as part of the new tax credit. This might help you buy a few more things. But, in terms of meaningful spending or debt reduction, it really won’t be all that helpful. I, however, would save or invest it. That $13 a week, in the right place, will add up big time and yield substantial returns down the road.
- Child tax credit ($1,000) will now be offered to more families that don’t make enough to pay income taxes, and the EIC will be expanded to included more low-income families with three children or more. If you are struggling — especially because job loss may have changed your situation — this might be helpful to you.
- Those of us subject to the Alternative Minimum Tax (don’t get me started on this silliness) in the middle-class and in the upper-income class will not have to worry about it for now. But I’m sure that it’ll be back.
- $8,000 tax credit for first-time homebuyers who buy between January 1, 2009 and December 1, 2009.
- If you bought a new car this year, sales tax is written off. (Too bad I bought a used car.)
- If you have a child in college, you could see tax credits of up to $2,500 for 2009 and 2010 to help pay education-related expenses.
- For those who make green changes to their homes — energy efficient air conditioners, furnaces and windows — there is a 30% tax credit up to $1,500.
- Unemployed folks get help with COBRA premiums for nine months, as well as not being taxed on the first $2,400 received in unemployment benefits.
And, of course, there are a number of measures in the economic stimulus bill designed to help the poorest Americans, bring aid to higher education, benefit scientific research, improve infrastructure (“shovel ready” projects that could provide jobs), encourage more alternative energy development (which could make energy efficiency more affordable for more people in the long run), and education spending for elementary and secondary schools. More funding for police departments and work in the environmental sector will also be given. All of the above has the potential to help with job creation, as well as lay a foundation for a more innovative economy down the road.
Now, of course, it is time to see whether this all works well enough to make up for the tremendous amounts of debt our government is racking up (most of it going to China as debt holder) in order to pay for all of this economic stimulus spending.