While the country continues to focus on health care reform, and random events like last week’s “Balloon Boy” fiasco, advisors for the Obama Administration and leaders in Congress are quietly working on ways to further stimulate the economy. With unemployment rates continuing to climb, and a housing tax credit due to expire in a few weeks, there is pressure on the White House to do something else to help the economy. Since the Obama Administration asserts that their $787 billion stimulus package did prevent job losses, and helped the economy from falling further, many experts are predicting that they will support another type of stimulus program. To help the readers of my blog keep track of these new developments, I have put together the following article taking a deeper look at some of the suggestions being considered for this new stimulus package.
Not Really Another Package
One of the administration’s biggest priorities is to keep any new legislation from being labeled as another stimulus package. Why? Because it implies that the first package was unsuccessful, and taxpayers are not likely to support a second unsuccessful program. The Obama Administration claims that only part of the original $787 billion budget has been spent, and that the program will fund projects aimed at helping the economy for the next year. With the first stimulus package still on everyone’s mind, and a huge health care reform bill, it may be difficult to get the American public to support another huge government program. Therefore, it is likely that we will see a handful of smaller pieces of legislation signed into law to help improve the economy rather than one big, expensive stimulus package.
Extending the Homebuyers Credit
One of the first actions Congress will likely take is to extend the $8,000 first time homebuyers credit that is due to expire on November 30th. The program has been deemed successful by dozens of economists, and there are dozens of industries lobbying heavily for it to be extended. Some proposals even call for the credit to be offered to all homebuyers, as opposed to just those who have not owned a home within the past three years, and others even call for it to be increased to $15,000.
$250 Check to Social Security Recipients
Like I mentioned last week, President Obama has called on Congress to send another batch of $250 checks to recipients of Social Security benefits. Earlier in the year, checks were sent out to Social Security recipients as well as taxpayers enrolled in Veterans Administration, Railroad Retirement and Supplemental Security Income benefit programs as part of February’s $787-billion economic stimulus package. Since it was announced last week that there would be no increase in the amount of money people on Social Security receive this year, many are predicting that another one time payment will be made.
Extend Unemployment Benefits
With businesses making cuts, it is getting harder and harder for Americans to find new jobs, as such the average time it takes someone to find a new employer is now longer then the length of time they can collect unemployment benefits. Therefore it is likely that Congress will extend the amount of time people can collect their benefits. Some proposals in the House of Representatives aim to provide 13 additional weeks of benefits in states with jobless rates of 8.5% or higher, while the Senate is considering proposals to extend benefits in all states.
Health Insurance for Unemployed Workers
Earlier in the year, Congress passed an act that provided a 65% subsidy of COBRA health-insurance premiums for workers laid off between September 2008 and the end of this year. For those of you who may not already know, COBRA is the program that allows taxpayers to keep their health insurance benefits after they have been let go. Since the subsidy, enrollments in COBRA have doubled, and it is expected that Congress will extend this program into next year.
Incentives for Companies Hiring New Employees
The original stimulus package had a tax credit for employers hiring new workers, but it was removed before the bill was signed into law. Now members of Congress are considering a variety of proposals aimed at offering incentives for companies to hire new employees. There is a proposal in the Senate to offer a $4,000 tax credit to businesses that expand their payroll. However, there is a lot of criticism over these types of incentives, and I am not sure if any would ever become law.
Refunds for Losses
Last week it was announced that Speaker of the House, Nancy Pelosi was also considering a proposal from a Republican Congressman to allow companies that are losing money to use their losses to get refunds of taxes paid in the previous five years. Currently, most businesses can only use current losses to get refunds from the previous year. A similar proposal was included in an early draft of February’s stimulus package, but was dropped when it was discovered it would cost nearly $20 billion.