Inaugural rehearsalObama told all the people complaining about the economic stimulus package to present better ideas if they didn't like what he was offering (and if you ask me, any opposition isn't serious, only political theater), so Paul Krugman did.
Krugman, a recent Nobel Prize winner for his economics and NYT columnist, says the economic recovery package needs a bigger number:
First, Mr. Obama should scrap his proposal for $150 billion in business tax cuts, which would do little to help the economy. Ideally he’d scrap the proposed $150 billion payroll tax cut as well, though I’m aware that it was a campaign promise.Obama has asked for the remaining TARP money and President Bush agreed to release it:
Money not squandered on ineffective tax cuts could be used to provide further relief to Americans in distress — enhanced unemployment benefits, expanded Medicaid and more. And why not get an early start on the insurance subsidies — probably running at $100 billion or more per year — that will be essential if we’re going to achieve universal health care?
Mainly, though, Mr. Obama needs to make his plan bigger. To see why, consider a new report from his own economic team. NYT
President-elect Barack Obama made his case to Congress for the release of $350 billion in remaining federal bailout funds.CNN Money has a pretty good summary of Obama's stimulus plan:
A top Obama economic aide laid out new priorities for the use of the remaining balance under the Treasury Department's $700 billion Troubled Asset Relief Program, or TARP. In a letter addressed to the leadership of the Senate and House of Representatives, the Obama team strikes a note of urgency about winning the release of the funds.
"President-elect Obama believes it is not too late to change course, but it will be if we don't take dramatic action as soon as possible," says the letter, written by Larry Summers, director-designate of the National Economic Council. CNN
The plan proposes four main categories of measures: Investment in infrastructure, funds to cash-strapped states, expansion of safety net programs to protect the vulnerable, and tax cuts.
Infrastructure: The job creation machine
A key aspect to the the stimulus plan is investment in the nation's infrastructure, which Obama expects to help create between 3 million and 4 million jobs.
Construction projects: Fund the rebuilding of crumbling roads and bridges. Obama wants to rebuild schools and modernize classrooms, labs and libraries.
Renewable energy: Double production of alternative energy in the next three years by modernizing 75% of federal buildings, investing in solar panels and wind turbines and by making cars more fuel-efficient. Obama also wants to modernize the nation's electrical grid with a new, cost-efficient "smart" grid that can deliver electricity from clean, alternative energy sources.
Broadband: Expand broadband Internet lines across rural and urban areas of America.
Health care records: Modernize the health care system by computerizing all of the nations' medical records in the next five years.
Science, research and technology: Invest in scientific innovation to create new industries, new jobs and medical breakthroughs.
State relief: Funding for budget shortfalls
As states face budget shortfalls, Obama's plan seeks to help states pay for Medicaid and unemployment benefits.
State fiscal relief will be allocated to prevent increases in state and local taxes, provided they use the money to maintain essential services like police, fire, education, and health care.
Safety net: Helping the most vulnerable
Obama proposes temporary programs to protect those most vulnerable to the effects of the recession.
Federal aid will go to temporary increases in food stamp spending, extensions and expansions of unemployment insurance, as well as health care coverage for unemployed.
Tax cuts: Breaks for businesses and the middle-class
The president-elect will propose roughly $300 billion in tax cuts for individuals and businesses, adding up to about 40% of the total stimulus plan.
Middle-class tax cut: An estimated 95% of low-income and middle-class families will receive a refundable tax cut equal to $500 a year for individuals and $1,000 for couples. The credit would essentially be a payroll tax credit, with companies able to reduce the tax they withhold from employees' paychecks.
Small business write-offs: Obama would increase the amount of expenses small businesses can write off to $250,000 in 2009 and 2010 from the current $125,000 level.
Tax cuts for companies suffering losses: He would extend the so-called net-operating loss carryback to five years from two years. For businesses that book losses in 2008 and 2009, the provision allows companies to apply their losses to past and future tax bills so that they can get money back on taxes they've already paid or would otherwise have to pay. CNN
