House Approves Stimulus Plan
Congress moved quickly to pass Barack Obama’s $819 billion economic stimulus plan, little more than a week after he took office. The package was passed 244-188 with no Republicans voting for the measure, twelve Democrats also voted against it.
The lack of bipartisan support is troubling and the bill will move on to the Senate where significant changes are likely to be made. The Republicans hold enough seats in the Senate that they are able to put pressure on the Democrats and can delay a vote with procedural obstacles.
As the plan stands now, it contains about $275 billion in tax cuts and approximately $550 billion in direct fiscal spending by the government. The Republicans are pushing for more tax cuts and less spending, House Democrats rejected a proposal that would have lowered the two lowest marginal tax rates by 5% each.
The stimulus plan would create between 1 million and 3 million jobs during the next few years. The economy lost approximately 2.6 million jobs last year and there have been a wave of jobs cuts that have been announced in the first quarter as corporation desperately seek ways to cut costs.
In related news, the Fed announced it was keeping interest rates at zero percent for the time being and is likely to start purchasing Treasury Securities on the open market. Their desire is to keep yields fairly low with the government about to add significantly to the national debt with it’s massive spending increases.
My only worry is that the new stimulus plans doesn’t focus on the housing situation enough and that the current plan will be a mere band aid on the economy like the initial stimulus plan that was passed a year ago.
