Stephen Lendman at Unlikely 2.0

Toxic Plans for Toxic Assets
Part 3

Stimulus 101 — The Devil Is in the Details and Follow-Through

Hudson again: Trillions for banksters, crumbs for the public. But fixing today's economy requires change. "Today's economic shrinkage cannot be reversed without a recovery in consumer demand." Not a small or temporary one, a real sustained one. "The economy has lost the 'virtual wealth' in higher-priced homes and (a healthy) stock market, and must rely on after-tax earnings (alone). But I see little concern for wage earners in the Treasury plan," and not enough in the stimulus. "Without debt relief (and ending job losses), consumer spending and business investment will not recover."

Geithner's plan doesn't address this. "It seeks to recover the debt-bubble economy, not the real (one) of production and consumption." It's the same failed approach as under Bush. Why not? As New York Fed president, Geithner and Paulson engineered it along with Fed chairman Bernanke.

As for "stimulus," the House and Senate (on February 13^th) passed the American Recovery and Reinvestment Act (ARRA) of 2009. It contains 1041 pages, and as Bloomberg reported, full details "were still emerging as the plan headed for congressional passage." Others in Congress complained that it was impossible to read ahead of the rushed through vote.

From what's known, here's a breakdown of most of the approved $787 billion:

Overall

$287 billion in tax cuts; $310 billion in discretionary spending, including infrastructure, energy and healthcare systems; and $190 billion for benefits, including unemployment and Medicaid.

For the Poor and Unemployed

$40.5 billion for 20 extra weeks of unemployment benefits through December 31 plus another 13 weeks for workers in 30 "high unemployment" states; also a temporary extra $25 weekly benefit, and the first $2400 in benefits are exempt from federal income tax in 2009;
$20 billion for food stamps;
$3 billion in temporary welfare and other miscellaneous benefits.
Comment: these are meagre amounts for millions of beleaguered households, including one worker every five seconds losing his or her job; many more forced to part-time from full-time ones; pensions and benefits being lost; and tens of millions in the country overall under growing duress.

Direct Cash Payments

$14 billion for one-time $250 payments to Social Security recipients, poor people on Supplemental Security Income, and veterans on disability and pensions.
Comment: the amount is so small, it hardly matters.

Infrastructure

$46 billion for transportation projects, including $27 billion for highways and bridge construction;
$8.4 billion for mass transit;
$8 billion for high-speed railways; $1.3 billion for Amtrak;
$4.6 billion for the Army Corps of Engineers;
$4 billion for public housing;
$6.4 billion for clean and drinking water projects;
$7 billion for broadband Internet service to underserved areas.
Comment: most allocations are small; will take time to kick in; and will mostly enrich developers, construction firms, and the FIRE sector (finance, insurance, and real estate).

Health Care

$24.7 billion for a 65% subsidy for health insurance premiums for up to nine months for the newly unemployed under the (1985-enacted) COBRA program; COBRA lets these workers keep their health insurance for a limited time; those eligible are individuals earning $125,000 or less and couples with incomes of $250,000 or less;
$87 billion to states for Medicaid;
$19 billion to modernize health information technology systems - this is a plan to create a health history database for everyone in the country; let private produce business produce and control it, and share or sell the information to all takers; in other words, our personal health history will be privatized for profit;
$10 billion for health research and construction of National Institutes of Health facilities;
$8 billion to states to defray budget shortfalls.
Comment: some of this will help, but it's not enough; no plan is envisioned for even partial national health care at a time nearly 50 million Americans are uninsured and millions more will be in coming years; as for the states and cities, combined they need tens of billions to close their budget gaps.

Energy

$50 billion for various programs; some for efficiency, weatherizing low-income homes, and likely small amounts for renewable energy — too small to matter;
$6.4 billion for nuclear weapons site clean up; the problem is so great, tens of billions are needed;
$11 billion for a so-called "smart electricity grid" to reduce waste;
$13.9 billion for subsidized renewable energy project loans;
$6.3 billion for state efficient and clean energy;
$4.5 billion to make federal buildings more energy efficient.
Comment: nearly all of this is for business.

Education

$47 billion for states to relieve budget shortfalls and other purposes;
$26 billion for special education and No Child Left Behind privatization and testing programs in K-12;
$15.6 billion for Pell Grant increases by $500 - $5350 in 2009 and $5500 in 2010;
$2 billion for Head Start.
Comment: like the Bush administration, Obama and his Education Secretary, Arne Duncan, are committed to destroying public education nationally and turning it over to business for profit.

Homeland Security

$2.8 billion for DHS programs, including $1 billion for airport screening equipment.
Comment: this is more funding to militarize the country.

Law Enforcement

$4 billion to states and local law enforcement for officers and equipment.
Comment: still more funding for militarization.

Taxes

a new tax credit: $115 billion for a $400 per worker, $800 per couple tax credit in 2009 and 2010;
starting in June 2009, most workers will have about $15 less per bi-weekly pay period withheld from paychecks over a one-year period;
millions of Americans who earn too little to pay federal income tax can file returns in 2010 and receive credits;
individuals earning over $75,000 and couples exceeding $150,000 will receive reduced amounts; individuals earning over $100,000 and couples $200,000 get nothing;
$70 billion in 2009 for alternative minimum tax (AMT) relief for about 24 million taxpayers; an average family of four affected will save $2300; this is substantial since families earning as little as $45,000 otherwise would be taxed;
$13.9 billion for a $2500 expanded tax credit (above the current $1800) for college tuition and related expenses for 2009 and 2010; the credit applies for individuals earning no more than $80,000 and couples a maximum $160,000; this helps but barely relieves the burgeoning tuition burden that makes college unaffordable for millions without considerable scholarship aid plus the ability to get loans for the residual;
$5 billion in 2009 for faster business depreciation on equipment, including computers;
$6.6 billion for a temporary $8000 first-time home-buyer credit for purchases after January 1^st and before December 1^st, 2009; removed is the current requirement for credits to be repaid if buyers stay in their homes for less than three years; those eligible are individuals earning $75,000 or less and couples earning $150,000 or less;
$2.5 billion to make sales and excise taxes paid on new car, recreational vehicle or motorcycle purchases tax deductible; excluded are individuals earning $125,000 or more and couples earning $250,000 or more;
$14.8 billion for a temporary child tax credit increase by lowering the income threshold to $3000 in 2009 and 2010;
$4.6 billion for a temporary earned income tax credit to 45% from 40% for qualifying families with three or more children; it also includes marriage penalty relief for couples who qualify;
companies and buyout firms that restructure debt without bankruptcy also get tax help; and
a late addition was a $3.2 billion tax benefit for General Motors and a $19 billion tax refund commitment to businesses for later this year;
Comment: some provisions for the public are helpful but fall way short of aiding beleaguered homeowners and restoring jobs and income, without which economic recovery won't happen.

Overall, "stimulus" provides some household help given the degree of public anger that could boil over without it. The amounts, however, are small, inadequate, and, at best, for temporary, not longer term, relief, and even then, way too little for people most in need.

Critics call it a spending, not a stimulus, bill. Others fear unmanageable deficits and the willingness of foreign capital to keep financing them. Mostly there's concern for what economists like Michael Hudson, Nouriel Roubini and others explain. Nationalizing zombie banks and writing down their debt is the only way back to economic health, but administration plans aren't proposing it.