Proposed economic revocery package

by Lesley Politi on January 12, 2009

(01-06) 04:00 PST Washington

Proposed economic recovery package

The economic package under consideration by President-elect Barack Obama and his congressional allies would commit $675 billion to $775 billion over two years (although additional proposals by lawmakers could increase the cost to as much as $850 billion). The plan covers five main areas of spending and tax breaks: health, education, infrastructure, energy, and support for the poor and the unemployed. Obama has set a goal to create or save 3 million jobs in two years. A look at major components of the plan and estimated costs, where available:

Tax cuts for workers and businesses ($270 billion to $310 billion)

About half of the money would go to workers under what Obama during his campaign called the Making Work Pay credit, worth up to $500 for individuals and $1,000 for families. The Obama campaign estimated that about 150 million households making less than $200,000 would qualify, including those who make too little to pay federal income taxes. Businesses would get tax incentives to create jobs and invest in equipment or factories.

Expansion of health and unemployment benefits

Obama and the Democrats are considering major expansions of government-assisted health insurance and unemployment compensation, including a proposal to extend unemployment insurance to part-time workers, an idea blocked in the past by congressional Republicans. Other policy changes would subsidize employers’ expenses for temporarily continuing health insurance coverage for laid-off and retired workers and their dependents, as mandated under the 22-year-old federal COBRA law, and allow workers who lose jobs that did not come with insurance benefits to be eligible, for the first time, to apply for Medicaid.

Aid to states for health and education ($140 billion to $200 billion)

The money would let local governments subsidize costs for Medicaid and education programs so they don’t have to raise taxes and cut essential programs.

Infrastructure, energy and jobs

Obama said he would “put people back to work today and reduce our dependence on foreign oil tomorrow” through spending and tax incentives to double production of renewable energy; make government buildings more energy efficient; build and renovate roads, bridges and schools; and modernize health care technology.


Besides money to build and renovate schools, Obama plans to call for money to train more teachers, expand early childhood education and provide more college tuition aid.

Source: New York Times

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