White House Report: Stimulus Bill is on the Right Track

One of the most talked-about issues in the coming Midterm elections is the state economy. In fact, the votes for this election will be greatly influenced by how candidates will address the very sensitive issue of unemployment. During the past couple of months, there have been mostly negative feedbacks towards the stimulus program that was approved by President Obama more than a year ago. In fact, some sectors in society even tagged it as an ultimate failure. There are numerous criticisms as to why the stimulus was unable to live up to its expectations of creating and saving between 900,000 – 3.5 million jobs.

Despite the numerous and sometimes harsh criticisms, the White House now claims the $800 billion stimulus bill is still on tract in producing the targeted amount of jobs since it was passed in Congress. It was remembered that the stimulus bill was signed by Congress February of last year as a way to minimize the destructive effects of the economic recession and jumpstart the economy. The funds will be spent for the next ten years with the bulk of it on tax cuts and tax breaks. Its major goal was to increase consumer spending in order to also generate more jobs.

But critics most especially Republicans said that the bill was ineffective and was only able to come up with a very minimal number of jobs. They also cited the increasing national rate of unemployment which now stands at over 9.6%. In a report presented by Vice President Joe Biden to President Obama, he underlined the consistent progress of their commitment to create jobs that is slowly being achieved by the stimulus. He also added that taxes have been lowered in over 95 percent of working families.

The report also mentioned that about $300 billion has been spent for the continuity of unemployment benefits, government projects and various grants to states in order to avoid layoffs of public workers. Another $243 billion was allocated for tax cuts where business institutions and institutions will surely benefit. Also included in the funding was Obama’s “Making Work Pay” policy where it gives $400 worth of tax credit to individuals while $800 for couples. The office of the nonpartisan Congressional Budget Office also claims that the bill is credited to over 1.4 to 3.3 million jobs.

Also included in the report is the renewal this year of unemployment insurance for the long-term jobless and funding aid to state governments and local school boards. Other projects such as reforms in the transportation sector (high speed rail) and other research and development projects (Information Technology) were also in high note. What’s more impressive is that only 0.2 percent of stimulus projects were investigated for reasons of fraud. This number is significantly lower than typical federal programs.

But several Republicans have criticized various stimulus projects. For example, Sen. Tom Boburn pointed out dozens of unreasonable projects such as the $554,000 used to replace the windows of a visitor center in Mount St. Helens. The center was reportedly closed three years ago by the state government. Also, another $90,000 was used to replace a five-year-old stretch of sidewalk in an Oklahoma town that led to a ditch. But a report on Friday by the Commerce Depart indicated that there was a big increase in construction spending which helped to reverse the negative effects of the recession to the sector.

Change of Heart: More Democrats now oppose the Obama Plan for Tax Cuts

With just a couple more months to go before the U.S. midterm elections, American politicians are now more than busy wrapping up their campaigns and at the same time deciding on critical issues in order to boost their image. Since the start of the recession, the nation has been very consistent in asking the government for one specific thing and that is to create jobs. The previous stimulus package presented by no other than Pres. Obama was seen as a failed attempt in generating employment. And today, the voting population has been very concerned about creating jobs up to the point where it will greatly influence their votes come election time.

The previous tax cuts by then President George Bush are already expiring and Congress has been puzzled by the possibility of extending it. Meanwhile, U.S. President Barack Obama has called for the expiration of these tax breaks. He later proposed that these tax cuts will only be extended to families who earn less than $$250,000 a year. It is interesting to note that over half of the total income in the United States is concentrated to the top 10% of the list of wealthiest people in the nation. He wanted to raise taxes especially to the wealthy class stating that this will generate enough income for the government to pursue other projects and avoid any further deficit.

Previously, Democrats have strongly supported Obama’s stance on this matter. But on Wednesday, and upon seeing the disagreement and discontent of millions of American citizens, numerous Democrats have softened their stance and now support the extension of tax cuts for all people regardless of income. Democrats have received intense pressure on their stance for this matter especially those who are running this November. Rep. Jim Marshall of D-Ga. argued that at this time of recession, the government should be well aware of consequences and avoid raising taxes.

Recently, there were about 31 nervous Democrats who signed a letter that was urging House Speaker Nancy Pelosi and Majority Leader Steny Hoyer, to abandon the Obama plan and support the extension of Bush-era tax cuts to everyone. With 435 House seats, 37 in the Senate and the Democratic majorities in both houses on the line, Democrats are afraid of being afraid of being tagged as “Tax Hikers” especially that the election is getting nearer. Obama has blamed the sudden change of heart to Republicans who wanted to take hostage the middle class tax cuts so that they can come up with an additional tax cut for the wealthiest 2% of the nation.

While Obama only supports tax cuts for people earning $250,000 and less, Republicans support a full renewal of all tax cuts, regardless of income, despite a 10-year cost to the government of about $700 billion above Obama's plan. House Republican leader John Boehner said that “If we're serious about helping our economy this month we need to stop the tax hikes, and we need to cut spending,". With several weeks to go, we can expect both parties to come up with strategies in order to win the hearts of the people and gain control of the House and the Senate.

Obama’s $300 Billion Tax Break for Business: A Political Move for November?

Unemployment and underemployment are perhaps the main reasons why a recession is very destructive to an economy. Without jobs or any source of living, people will not have enough money to spend for basic commodities and other luxurious things. Consumer spending will be very much limited and thus will reduce the profit of other businesses as well. This domino effect is proven to be the real hindrance for economic growth. The less money that revolves in the market, the more stagnant an economy is and the more it is prone to a double dip recession.

The U.S. economy has been one of the world economies most hit by the recession. Recent figures show that the unemployment rate has now stood at 9.6%. This figure is projected to rise as more federal workers and business employees are getting axed as the days passed by. Over 8 million jobs have already been lost and the Obama administration still hasn’t done anything significant enough to address this issue. In fact, large businesses are strongly protesting on the impending expiration of tax breaks which they say might add up to more job losses.

Pres. Obama and his administration previously passed the stimulus bill which granted over $800 billion to business firms and government institutions. The aim was to promote spending in order to generate jobs and stimulate economic growth. But many people believed that the stimulus bill was a failure resulting in the sudden dip of Obama’s trust and confidence rating. With intense pressure coming from American citizens and other lawmakers along with the upcoming November midterm elections, the Obama administration is strongly considering everything it can do to help save the economy and bring back the trust needed for his democratic party.

This Wednesday, President Barack Obama is set to propose $300 billion for tax breaks which will be given to various businesses. $200 billion will be for tax cuts while $100 billion will be allocated for expanding and making permanent a tax credit for research and development. He believes that if businesses will be able to reduce their costs, they will eventually start hiring people again and provide more jobs to the industry. This measure is expected to provide tax incentives to businesses who will be investing rapidly to the U.S. economy.

This measure comes along with another $50 billion aid for infrastructure development. It is interesting to note that because voter’s worries about the economy, the Democrats are strongly facing the possibility of incurring heavy losses on the upcoming November elections. The president is doing whatever he can to save the economy and provide a positive feedback for his democratic party on the upcoming elections. Besides, the control for Congress is at stake.