Stimulate me!

President Obama’s stimulus package passed both houses of Congress. Lots of provisions to stimulate the economy. Here’s how it directly affects me, right now.

Stimulus measures that may help your wallet – Feb. 13, 2009

Making Work Pay Credit: The bill provides a $400 credit per worker and a $800 credit per dual-earner couple. The full credit would be paid to people making $75,000 or less ($150,000 per dual-earner couple). A partial credit would be paid to those making above those amounts but no more than $100,000 ($200,000 for couples).

The credit would also be refundable, which means that even very low-income families who don’t make enough to owe income tax would be able to claim it.

For most working individuals, the credit will be paid over time at roughly $15 per period, assuming 26 pay periods in a year. Estimated cost: $116 billion.

And should things continue to go south for financial companies, and I lose my job (God forbid, knock wood, and pretty much every other superstitious way I can think of to prevent that from happening):

Health insurance help for the jobless: The bill includes provisions to help eligible jobless workers pay for health insurance under Cobra. Cobra coverage allows newly unemployed workers to keep health insurance provided by their former employers for a period of time.

For workers who have been laid off between Sept. 1, 2008, and Dec. 31, 2009, the government will subsidize 65% of their premiums under Cobra for up to 9 months.

Those people laid off between Sept. 1, 2008, and the day the stimulus law goes into effect, and who did not sign up for Cobra, will get an additional 60 days to do so and receive the subsidy.

The subsidy will be limited to those whose income for the year is $125,000 or less ($250,000 for couples filing jointly). Estimated cost: $24.7 billion.

Another provision provides states funding to help pay for expanded Medicaid rolls for workers who’ve lost their jobs and can’t afford health care on their own or can’t get Cobra coverage because their former employer doesn’t offer a health care plan. Estimated cost: $87 billion.

Unemployment benefits: The bill provides jobless workers with an additional 20 weeks in unemployment benefits, and 13 weeks on top of that if they live in what’s deemed a high unemployment state, of which there are now about 30. Estimated cost: $27 billion.

In addition, the weekly unemployment benefit will temporarily increase by $25 on top of the roughly $300 jobless workers currently receive. Estimated cost: $8.8 billion.

Plus, the first $2,400 of benefits in 2009 would be exempt from federal income taxes. Estimated cost: $4.7 billion.

I hope that no one I know, and none of my readers have to take advantage of these latter two provisions.

8 Comments

  1. Family A – Husband and wife with 13 and 19 year old children. On in high school and one in college. Husband and wife recently lost their jobs. He was employed as a mortgage broker and she was a manager for a builder. They went from a combined income of $350,000 to zero.

    When they were both employed, they took several expensive vacations each year, ate out at fine restaurants three times a week and they bought a boat, two jet skis, two snowmobiles, two motorcycles and an RV. The 19 year old has a brand new car that Mommy and Daddy bought her. It’s a $40,000 Lexus. Dad drives a Mercedes 500 and Mom drives a Jag. Junior at 13 has an allowance of $50 a week. Missy, in college, lasted one night as a waitress before she called Daddy to cry about a busted fingernail. Daddy got upset and called the restaurant manager. The Daddy called Missy and told her to just calm down, take a Valium and relax . . . she didn’t have to work, and Daddy would still send her $200 a week for her expenses.

    Her expenses . . . $50 a week for her nails, $100 a month for her hair and clothes. No . . . strike that. She has a credit card for her shopping . . . and Mommy pays that bill.

    Family A has NO savings. They used their house as a revolving ATM machine. The house was worth $700,000 at the peak, on which they have $650,000 in ARM mortgages and equity lines. Now the house is worth $400,000. Oh by the way, they had $45,000 in credit card debt when they lost their jobs. Now they have $125,000 in credit card debt and the interest rate on all of their cards is 29.99%, so interest alone is now $3,125 a month.

    Family A has not paid their mortgage in six months. Mr. A has been looking for a job, but he has turned down five jobs because they only paid half of what he was earning. He wants $250,000 a year, and his best offer was $125,000. Mrs. A got her real estate license and is selling real estate. Did I say selling? Silly me. She spent $4,000 to get her license and $12,000 on new clothes and $2,500 on accessories and office stuff. But she is not selling. In fact, she spends most of her time at Open House get-togethers with other agents and lunches with the girls.

    Mr. and Mrs. A are also collecting unemployment benefits.

    Family B – Same as Family A – Husband and wife with 13 and 19 year old children. On in high school and one in college.

    Mr. B has held the same job as a manager at a local hotel for 18 years. He earns $67,000. Mrs. B is an ER nurse and earns $72,000 a year. Instead of golfing on Saturdays, Mr. B also works Saturdays as a cook in a local restaurant at $18 to earn a few extra bucks so they can pay their mortgage.

    Family B has one car. It is a seven year old Chevy. Family B’s last vacation was a week at the Jersey Shore where they stayed at a relative’s house. Family B does NOT own a boat, nor any jet skis, nor any snowmobiles and they don’t own an RV. They eat out once a month at Denny’s. They shop at Sam’s Club. Junior has a $10 a week allowance and he earns another $30 a week doing chores. Missy works two jobs while attending a community college.

    Family B saves money and has about $200,000 in bank accounts saved by cutting corners for 20 years. Family B bought a $250,000 house a few years ago and it is now worth $180,000. Family B put down 30% on their home so they are at about break even on equity in the home. Family B has NO credit card debt.

    How It Works – Obama proposes to take Family B’s savings and hard earned money to reward Family A for living above their means with no sense of responsibility. Obama is going to yank the rug on Family B’s future so Family A can continue to live above their means . . . and Obama is going to tell Family B to work harder so they can pay more taxes, so Obama can give more money to Family A.

    Naturally, I have simplified the examples and there are millions of hard working Family B families that have lost their jobs and are stuck in homes that are underwater. But how does Obama plan on deciding who gets what and why? But that’s not all. Obama is planning on telling the people that loaned Family A money . . . that they are not going to get paid what they are entitled to, but Obama is going to come up with a new interest rate and . . . . AND Obama is going to reduce the principal due or extend the life of the loan or change the terms anyway he so pleases.

  2. BTW I reprinted that. I did not write it. It is the best intepretation of the bailout I have seen yet. Hope and Change…..

  3. And what kind of mortgage does Family B have that Dad needs to take a second job to pay the mortgage?

    If they put 30% down, then their mortgage was for $175K … and they have a combined income of $137K per year and no other debt. If they have a traditional 30-year fixed mortgage, with a high interest rate (7%), their monthly payment is $1165/month … something which a family making $137K/year should easily be able to make that payment.

    This family would receive:

    * A tax credit at a rate of 6.2 percent of earned income (after federal taxes are taken out), up to $400 for individuals and up to $800 for couples, in 2009 and 2010. The credit begins to phase out at income levels of $75,000 for individuals and $150,000 for married couples filing jointly. Since the credit is “refundable,” people with no federal income-tax liability will get money back.

    * Households making at least $3,000 to subtract $1,000 from their tax bill for each child in 2009 and 2010.

    * Expand the federal Hope scholarship for 2009 and 2010 to provide a tax credit of up to $2,500 a year for all four years of college tuition, instead of $1,800 a year for the first two years. Also, the credit would now be 40 percent refundable and cover costs of textbooks. The tax credit would phase out for individuals making between $80,000 and $90,000 and couples earning between $160,000 and $180,000. Allow computer-related expenses to be exempt under tax-advantaged college savings plans in 2009 and 2010.

    * Increased the maximum Pell Grant by $500, from $4,850 to $5,350.

    I’m seeing no evidence anywhere that indicates that Family B will be taxed higher to pay for Family A’s fuck-ups.

  4. You have indeed drank the Kool Aide my friend. I forgot that in Obamaland money rains down from the sky. The entire bailout is a bad idea, always has been. It does nothing to address any of the causes. Obama had a chance to start with a clean slate but he didn’t. He is increasing military spending, increasing the bailout amount and surrounding himself with Goldman thieves just like Bush did. A $400 tax credit are you serious? That will pay my heating bill for 2 months if I am lucky. $500 increase in Pell Grants? Wow! Small meaningless gestures.

    By printing money to pay for these retared bailouts, a war we should not be in let alone increasing the budget for, and “tax cuts”. He is further destroying the purchasing power of every dollar I make. My heating bills have more than doubled in the past 3 years, my electric bill is up, my mortgage rate stays the same because I pay it while those who don’t will get lower rates to stay in loans they should have never been approved for in the first place. Everyone wins! The banks will feel no pain for writing bad loans and the douchebags who took them can stay in the McMansion.

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