You might have thought that the cost of the stimulus package about to be signed into law was $789.5 billion, but it looks like the total bill for taxpayers -- the numbers detailed below exclude all the infrastructure investment -- must be much bigger.
That's because the subset of the total package that goes to consumers adds up to $42.8 billion on top of that total headline number, or $832.3 billion by my calculation. So there is either something wrong with the $789.5 billion figure, which is being highlighted in the media, or the cost estimates for the components are being calculated differently than the top-line number.
As often happens, about 80% of the total benefits to consumers are coming from 20% of the programs. In this case, just three of the 13 programs account for 84% -- or $699 billion -- of the total $832.3 billion benefits of the plan. Those three biggest programs are as follows:
- Alternative Minimum Tax (AMT) tax break for higher income families: The bill includes a one-year provision to protect middle- and upper-middle-income families from having to pay the AMT -- this will save those taxpayers $470 billion.
- Making Work Pay Credit: The bill provides a $400 credit per worker and an $800 credit per dual-earner couple, which is good only for individuals making less than $75,000 and dual-earner couples taking in below $150,000. This will save taxpayers $116 billion -- which amounts to $15 more cash per pay period.
- Health insurance help for the jobless: The bill helps eligible jobless workers pay for health insurance under Cobra, which allows newly unemployed workers to keep health insurance provided by their former employers for a certain period of time. The government will subsidize 65% of the Cobra premiums for individuals making less than $125,000 and couples filing jointly making under $250,000. This will produce $24.7 billion of benefits for consumers. And another health care subsidy for those who lost jobs at companies without health coverage would create another $87 billion in benefits
CNNMoney details all the other parts of the plan. Will this money stimulate the economy or will consumers save it? And is the size of the plan being artificially pushed down to help it pass?
I think taxpayers need answers to these questions.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book is You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing.
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Reader Comments (Page 1 of 1)
2-13-2009 @ 11:47AM
BHarrison said...
So, are all of the American people who responsibly lived prudently within their financial means going to just apathetically "sit back" and DO NOTHING while the INEPT, INCOMPETENT and/or TOTALLY CORRUPT Congressmen destroy the value of our life savings by these irresponsible "bail out" actions?
The American people need to rise up and throw these Congressmen out of office. Meanwhile, the likes of Barnie Frank, Ms pelosi, Mr. Reid, Mr. Dodd, Mel Martinez, etc. are compounding the economic damage to an exponential degree. These are the Congressmen who enabled and allowed all of the corporate CRIMINAL FRAUDS of the "derivatives", the pyramid and Ponzi schemes, and other FRAUDS that have decimated our national economy.
2-13-2009 @ 11:54AM
David said...
We truly are a nation of sheep if we allow this socialist in an empty suit ram this "stimulus" bill down the throats of our great-grandchildren. You government handout advocates will regret the day you voted for this negro you call the Messiah.
2-13-2009 @ 12:14PM
Jason said...
Wow David, that is pretty intense. I myself would have rather seen neither Republican or Democrat in office, but meh. It's the age of the internet, we all blow off steam on messages boards and Digg and then that's it. Those old coots know that we will never get out of our chairs to actually protest anything they do, so let the back scratching continue.
2-13-2009 @ 12:48PM
John said...
I started looking for my license plate holder that I used in the 60"s in my garage!!
It said, " CASH - GAS- or A** " Nobody rides for FREE!!!!
2-13-2009 @ 1:39PM
gandgcarpentry said...
In his speech before....he said the American worker would receive an additional 20.00 per pay period. Now he says 15.00...??? This stimulus package is a complete joke - I hope when everyone sees that a Republican can't run the country successfully and either can a Democrat, the last option, one that should have happened LONG Ago - VOTE INDEPENDENT!! PLEASE!!