Our economy's in the worst crisis since the Depression, and we need to turn things around. The government moved fast to pass the Economic Recovery and Reinvestment Plan – $787 billion of investment and tax cuts that will create 3.5 million jobs. Here are the plan's goals.
Step 1: Understand the basics Break the cycle. Right now, consumers are worried about the economy. They aren’t spending, so businesses are struggling. When businesses struggle, people lose jobs. When people lose jobs, they cut their spending. It’s a vicious cycle, one that the recovery package aims to break.
Step 2: Job creation Create jobs. The most important part of the package is job creation. The plan includes $150 billion to fund clean energy, technology, and infrastructure projects, which will employ millions of Americans looking for work.
Step 3: Move toward a green economy Create green jobs, which put people back to work today, and make us more energy independent in the future. The projects in the package include:Modernizing the country’s electrical gridDeveloping wind turbines, solar panels, biofuels, and advanced vehicle battery systemsInvesting in clean water, flood control, and environmental restorationAnd increasing energy-efficiency in homes and offices.
Step 4: Improve infrastructure To compete in a 21st-century economy, we also need to provide jobs that help construct a 21st-century infrastructure using 21st-century technology. The plan includes:Upgrading our crumbling roads and bridgesImproving public transit and rail systemsModernizing the health-care system for long-term savingsFunding biomedical, science, and engineering researchAnd extending broadband services to underserved communities across the country.
Step 5: Improve education Improve education to make America more competitive. To increase higher-education opportunities, college students will be eligible for a $2,500 tuition tax credit, $200 million will expand work-study programs, and the maximum Pell Grant – federal aid primarily for low-income students – will increase by $500. The package also provides more than $2 billion for early childhood development, and $13 billion in grants to ensure disadvantaged kids achieve high academic standards.
Step 6: Unemployment benefits Help the unemployed, who are bearing the brunt of the economic crisis. Anyone who lost their job won’t have to pay income taxes on the first $2,400 of federal unemployment benefits, and government subsidies will make their health insurance more affordable. The package increases and extends unemployment benefits through 2009 and boosts food stamp benefits to offset rising food costs.
Step 7: Tax relief Cut taxes and boost consumer confidence. The stimulus package includes $288 billion in tax cuts. In 2009 and 2010, President Obama’s signature 'Making Work Pay' tax cut will provide most individuals with $400 and most families with $800. Qualified retirees and disabled veterans will get a one-time $250 payment. These cuts ensure that working people pay less taxes, so they have more money to spend.
TIP: To help pump money into the economy over time, the 'Making Work Pay' tax credits won’t be distributed as a lump sum. Beginning in June, you’ll see an extra $13 in your weekly paycheck, and an extra $8 starting in January 2010.
Step 8: Housing and auto credits Boost the housing and auto markets. To help buoy the housing market and stem foreclosures, the tax credit for first-time homebuyers will increase to $8,000. And if you purchase a new car, you can deduct the sales tax. These tax savings will translate into more people buying cars, which will help shore up the auto industry in addition to encouraging consumer spending.
Step 9: Send money to states Help all 50 states. The economy can’t bounce back if states can’t balance their budgets, and if states suffer budget shortfalls, they can’t pay for essentials like public safety and other critical services, quality teachers, and school renovations. The package provides more than $50 billion for state services, plus an $87 billion increase in federal funding for Medicaid to states.
Step 10: Work together Encourage optimism. We can’t expect the government to solve the financial crisis alone, or overnight. The private sector must contribute to job creation and economic growth. But the stimulus package is the first, critical step to getting our economy back on track. As President Obama said, 'We will turn this crisis into opportunity and emerge from our painful present into a brighter future.'
FACT: You can find out more details of the stimulus plan, and even track how government money is being spent once the plan kicks in, at recovery.gov.