Stimulus Plan 2009, Research Paper Example

With the U.S. economy experiencing disorder and chaos, there have been many debates concerning the 2009 economic stimulus plan. The stimulus plan in question, also identified as the American Recovery and Reinvestment Act, is not a repetition of attempts undertaken in 2008. This plan provides for economic motivation by means of providing money for various infrastructure projects to bring cash back into local economies and intensify job formation. Government expenditures, as a type of an economic encouragement inserts the money back into the financial system, which ultimately increases the confidence of both investors and consumers, which, consequently, reinforces the stock market. In this essay, I will go over the essence of the Stimulus Plan and its effects on the economy and the people, find out how this plan refers to the concept of Federalism, and research into the positive and negative consequences of the act in the State of California.

In essence, 2009 Economic Stimulus Plan is a diverse infrastructure project. Infrastructure projects incorporate development and renovation of roads, bridges, sewage systems, pipelines, airports, power plants, telecommunication systems, and other important infrastructural units and are a good source of new jobs. Moreover, such projects contain long-term perspectives of returning cash into the economy. U.S. government money, either borrowed or coming from taxations, is supposed to be concentrated in the local financial systems. Companies and corporations providing materials and services for the mentioned infrastructure projects would be in need of hiring more workers (these workers are apparently the ones who are out of their jobs at the moment). Business will be filled with cash and the funds will flow into the hands of citizens, and, ultimately, back to the government through taxes. If companies would gain profits, their leadership will be feeling confident about the future perspectives and recommence or intensify hiring. Additionally, if revenue increases in publicly traded companies, investors will consider it safe to resume investing in the stock market. “The proposal would create 3 million new jobs, 2.5 million of which will be private sector jobs” (Rose). Barack Obama might possibly tackle two spheres at once, the economy and the environment, by scheduling money from economic stimulus for various ‘green’ projects. This would most probably introduce new openings for different types of jobs. In essence, economic stimulus is a tool with the help of which a government is able to boost its economy, either on short- term basis, by means of pushing consumers and/or companies to buy goods, or on longer- term basis, through supporting the expansion of businesses and the formation of jobs by way of investments in infrastructure and examination. “Economists disagree on the wisdom of extensive stimulus spending, as well as the particulars of the current U.S. plan. Given the current economic climate, most mainstream economists now say that the potential downsides of collapse are sufficiently grave that large stimulatory expenditures may be necessary” (Teslik).

In fact, president Obama has proposed new economic stimulus package of 2009, or so called American Recovery and Reinvestment Act in order to handle the financial crisis, since the Great Depression continues to worsen. First of all, this plan is supposed to affect U.S. citizens, as in the terms of strengthening their financial position and eventually providing economic stability. First of all, it will influence the taxation system for Americans whose annual income adds up to less than $200,000. “Under the plan, individuals would receive up to $500 and families up to $1,000 through a cut in payroll taxes on the first $8,100 in income.”(Wolf, 2009) Basically, this money would be delivered through paychecks as a reduction in Social Security withholdings, thus reinforcing consumer spending through small lift in household pocketbooks. On Jan. 15, 2009, House Democrats unveiled the details of their economic recovery package, an $825 billion combination of spending and tax cuts that are aimed to provide millions of unemployed Americans with jobs and prevent what is generally believed to be the nation’s worst recession since the times of the Great Depression.(NYT, 2009)

The new economic stimulus package has provided schools of California with the hope for recovery from the money cut by the state, thus providing a great impact on education.  Eventually, many schools will benefit from this stimulus plan, but the biggest benefits and advantages will be granted to impoverished schools.  Furthermore, another huge benefactor of the education federal aid is a fund that is referred to as Individuals with Disabilities in Education Act (IDEA). This fund gives California money for schools that can be used for special services for students with disabilities. Even though schools often receive money from IDEA every year on regular basis, the new stimulus package will considerably increase this budget. Moreover, this might be the hope that the average school needs to help reduce their budget shortfalls with a much required infusion. New economic stimulus package will also contribute to college education. “The tax package also includes a new credit of up to $2,500 for college tuition and related expenses, with certain income eligibility limits, and it included an enhanced $7,500 tax credit for first-time homebuyers.” (Herszenhorn and Zeleny, 2009) Thus, potential college students will have a chance to obtain a reduced tuition fee, along with first-time homebuyers, who will get essential down payment assistance.

The American Recovery and Reinvestment Act 2009 is targeted to stimulate employment, thus creating more working places and jobs. There are some parts of the stimulus plan that will provide immediate assistance to unemployed people, thus saving them from losing their homes and health care. It is predicted that a new stimulus package will create of save about 396,000 jobs in the state of California.(The White House, 2009) Some policy changes would subsidize employers’ expenses for the health insurance coverage for laid-off workers, which is under the Cobra law. The fact that the coverage is very expensive forces people to take any kind of job only to get medical care paid out. Moreover, this plan will also give workers an opportunity to be eligible to apply for Medicaid, in case they lost their jobs that didn’t come with insurance benefits.

The new economic stimulus plan or American Recovery and Reinvestment Act 2009 is aimed at stimulating the employment along with certain critical economic sectors and U.S. consumer spending. In fact, this plan is only for two years and it is supposed to get things moving fast, but one has to consider a better long-term view if the goal is for people to stay on their working places, thus contributing to the economy. The bailing out auto makers and banks, the housing crisis, and lots of other problems that led to current economical recession didn’t happen over the past two years, therefore, it will take quite a while to solve this problems, and the Obama’s stimulus plan will benefit to it.

Works Cited

Rose, J. Barack Obama’s 2009 Economic Stimulus Plan. 20 March 2009. 14 Apr. 2009. <http://www.consumerismcommentary.com/2009/01/07/barack-obamas-2009-economic-stimulus-plan/>.

Teslik, L. Backgrounder: The U.S. Economic Stimulus Plan. 27 Jan. 2007. 14 Apr. 2009. <http://www.nytimes.com/cfr/world/slot3_20090126.html?_r=1>.

Wolf, Richard. “Obama’s $825B stimulus plan includes spending, tax cuts.” USA Today.  16 Jan. 2009. 13 Apr. 2009. <http://www.usatoday.com/money/economy/2009-01-15-obama-stimulus-plan_N.htm>.

“Congress Moves on Stimulus Bill and Bailout Money.” The New York Times. 15 Jan. 2009. 13 Apr. 2009. <http://www.nytimes.com/2009/01/16/business/economy/16webstimulus.html?pagewanted=2>.

Herszenhorn, David, and John Zeleny. “House Democrats Release Details of Their Tax Plan.” The New York Times. 17 Jan. 2009. 13 Apr. 2009. <http://www.nytimes.com/2009/01/17/us/politics/17stimulus.html>.

The White House. “American Recovery and Reinvestment Act: State-by-state Jobs Impact.” 13 Feb. 2009. 13 Apr. 2009. <http://blogs.creativeloafing.com/politicalwhore/files/2009/02/recovery_act_state-by-state_jobs_2-131.pdf>.