According to an article in the Star-Telegram, the House and Senate are scheduled to vote on the Obama Administration’s $789 billion stimulus plan by Friday. The plan, which is touted by President Obama as a tool that will “save or create more than 3.5 million jobs and get our economy back on track” is filled with tax cuts and incentives to encourage consumer consumption which could prevent some companies from going bankrupt by saddle more Americans with debt.
If passed, the stimulus package would offer a $400-per-worker tax credit for lower and middle income taxpayers. For married couples, the tax credit would be $800. The tax credit would average out to an extra $13 in workers’ paychecks each week.
The amount is mocked by many analysts who insist that it is too little, too late to make any lasting impact on a failing economy experience record number foreclosures and bankruptcies. Well, one thing is for sure, $13 a week is not enough to avoid foreclosure or avoid a pending bankruptcy.
The stimulus bill also offers a one-time payment of $250 millions of Americans receiving Social Security benefits, veterans’ pensions or Supplemental Security Income payments. The most interesting measure of the stimulus bill is an $8,000 tax credit for people who purchase homes by August 2009.
This may in fact encourage many who haven’t already made the leap to purchase a home despite the threat of job losses and corporate bankruptcies. But are any of these measures helping to reduce foreclosures and bankruptcies? No, it’s not. Actually the $8,000 tax credit for home purchases made by August might cause more damage by encouraging ill-prepared individuals to purchase a home during this volatile time. And that’s always risky business.