Q&A: The Stimulus Plan

Q. Now that the Senate has passed its version of the stimulus plan, what will happen next?

A. Congress must now reconcile the $838 billion Senate bill with the House’s $819 billion version passed last month before sending final legislation to the White House.
That process is sure to involve more difficult negotiations because the House version contains more spending than the Senate bill, which includes more tax cuts, according to Financial Times.
President Barack Obama wants legislation ready to sign by the end of this week and Democratic leaders have promised to work through the President’s Day holiday recess next week if necessary.

Q. What are the differences between the two bills?

A.SPENDING
— State aid: The Senate bill has $39 billion in education aid to states. The House measure has $54 billion. It also includes a separate $25 billion block grant for states to use on other programs.
— Direct aid to individuals: The Senate devotes $17 billion for one-time $300 payments to Social Security recipients, poor people on Supplemental Security Income and veterans receiving disability and pensions. The House has $4 billion to provide a one-time additional Supplemental Security Income payment to poor elderly and disabled people of $450 for individuals and $630 for married couples.
— School construction: The House provides $19.5 billion to build and repair school and university facilities. The money was stripped from the Senate bill.

TAXES

— Alternative minimum tax: The Senate devotes $70 billion to “patch” the AMT, saving more than 20 million taxpayers a 2009 tax increase averaging about $2,000. The House bill does not include that provision.
— Homebuyer tax credit: The Senate provides $35.5 billion for a $15,000 tax credit for purchasers of homes bought in the year after the bill takes effect. The House includes $2.6 billion and limits its smaller $7,500 credit to first-time homebuyers for homes purchased from Jan. 1, 2009, to July 1, 2009, and phases out the credit for couples making more than $150,000.
— Carbuyer tax deduction: The Senate devotes $11 billion to make interest payments on loans for new cars and automobile sales taxes deductible. The House bill does not.

Q. How much Is $800 Billion?

A. An $800 billion stimulus plan would represent 5.6 percent of the $14.3 trillion U.S. economy — the size of U.S. gross domestic product last year measured in current, not inflation-adjusted, dollars, according to CNBC.
It is 1.8 times the size of the largest U.S. budget deficit in history — $455 billion — recorded in fiscal 2008.
If it were given directly to Americans, rather than through a mixture of tax cuts and spending to upgrade infrastructure, it would be $2,622 for every man, woman and child in the United States.

Q. How many Republicans have supported the bill?
A. The House version passed with no Republican support. Three Republicans supported the Senate bill. Last week, two moderate Republicans, Sens. Susan Collins of Maine and Arlen Specter of Pennsylvania, negotiated a compromise with Democrats that saw more than $100 billion of spending and tax credits cut from the package. The two Republicans and Sen. Olympia Snowe (R., Maine) were the only Senate Republicans who voted in favor of the legislation.

Q. Why are Republicans critical of the bills?

A. They say it is too costly, opens the door to scores of Democratic pet projects that taxpayers cannot afford, and is not focused on creating more jobs for families and small businesses. They are also critical of what they say is social spending proposals contained in the bills.

Q. Why is President Obama pushing the stimulus package?

A. The country is facing the worst recession since the Great Depression and an economic rescue package is needed to break the momentum of this recession, Obama says. His aim is to save and create 4 million jobs, which he thinks the stimulus package will achieve, along with putting cash in people’s pockets through tax cuts.

Compiled by PALLAVI AGARWAL is a staff writer for The Tampa Tribune