What a Typical Family Will Get From the Stimulus Package
President Obama’s weekly address promised this will be the fastest tax cut in history to start showing up in the hands of American families.
So what does that mean for us working stiffs? The “Making Work Pay” break is expected to affect about ninety-five percent of us – working families.
By April 1, Obama says, “typical” families will have an extra $65 on average to play with each month. Officially, it will be about $13 per paycheck in 2009, dropping to $7.70 per paycheck in 2010.
Rather than waiting around for tax cut checks to show up in your mailbox, these cuts will be made immediately by the person responsible for payroll at your job – they’ll be adjusting your deductions to put a little extra in your check and sending a little less on up to Uncle Sam.
I’ve heard from some folks that $65 a month just won’t cut it, but let’s face it – money is money. Every little bit helps. And $65 buys a lot of kids clothes off of the sale rack. It amounts to a yearly supply of yogurt drinks for my daughter (bought in bulk at Sam’s Club) or two days of daycare for a lot of folks (yes, there are places where daycare is $30 a day).
What’s interesting to note is that this cut is NOT supposed to be used to boost your savings for your kids’ education. Tax cuts sent in lump sums are more likely to be squirrelled away by the thrifty, while cuts in small increments are more likely to be spent on the little things (like the latte you cut out when things started getting tight) – boosting the economy.
So what will you be doing with the money? Will this help your family?
Image: AP
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It seems to me we have been made into a fool by voting for Obama. He is working hard at not being the President he promised to be, and that makes me question why he’s not protecting himself for the next election. Maybe he doesn
twyla and lovedanny, you are entertaining.
the fact is that obama is created the largest increase in spending ever and he is disguising it by calling it a “stimulus”. take a look at the tax cuts he is getting rid of. sure we get an extra 13 a paycheck, but bush cuts were nearly $50. so really it is costing americans about 37 dollars more with obama.
trickledown economic effectiveness aside, raising taxes for government spending, excessively, (electric golf carts) is irresponsible. and i won’t even start by cutting defense spending.
ignorance is bliss, isn’t it?!
http://www.nypost.com/seven/02262009/news/politics/congress_porky_pols_pig_out_on_fine_wine_157027.htm
how many pages are in the stimulus bill? has anyone actually read it?. the only real plus for health insurance has to do with the new cobra rules. if you have been recently let go of your job your responsible for 35 % of the monthly premium, the other 65% is paid by your employer, that is then reimbursed by the govt by offsetting payroll. we posted some info on our site in the article section at http://www.nychealthplan.com
lovedannygansdle,
You may be right about Bush’s stimulus (I was 21 when he was elected and staying home with my new baby) but I honestly only remember the one last year when he urged Americans to spend it. (Being good little republicans, we bought a BBQ and a digital camcorder.)
I put in my first comment that although I believe in the trickle down theory the problem lies with the people. You echoed that in your response.
Finally, I do not have a lot of time to research the things I trust my elected officials to take care of. I have 4 kids and 2 jobs. Reading Babble is my only downtime most days. (And I am thankful for it.) I listen to CNN on my satellite radio in the car for about 2 hours a day driving to and from work. That is where I get most of my news. I also have a terrible habit of reading the newspaper at work. Unfortunately, I do not seem to have the time to squeeze in the reading of the 1000+ pages of a stimulus bill.
I am thankful for any more money coming into my home. I am skeptical of Obama’s plan. While it does not seem like it will work, I am hopeful that he will be successful.
Actually, Amanda, Obama’s plan is to cut the deficit in half in his first term despite the spending in the stimulus. The budget will include considerable cuts in spending to reach that goal.
But, yes, I hear ya. Americans want tax cuts, and I understand why we wonder if it is wise to spend more money when the amount we’re spending in the bill is dizzying. The fact of the matter is that the tax cuts are more a result of the restructuring of the tax system of the past administration that gave most of the tax benefits to the most wealthy. From many of the comments I’ve read here, my sense is that people do appreciate the limited increase in their paychecks. The more significant part of the stimulus plan lies outside of income tax issues.
Is ballooning the national debt even more worth $65 a month?
I am much more interested in what the stimulus package means in terms of infrastructure (roads, schools, high speed rail) than tax cuts. Infrastructure improvements are will have a much bigger effect on families than tax cuts, especially $65 a month tax cuts)
Twyla,
Bush didn’t just do it once – he did it twice – in his first year in office and in 2007. Both were significant sums, and neither worked as they were intended to help the economy. Don’t you remember the first time he did it? Told everyone to go out and spend money, didn’t work. Both were hugely expensive for the government.
The trickle-down-theroy has been shown to have been ineffective economic policies, as enacted by both Reagan and Bush. Economists have shown that in practice, it has never worked. The wealthiest Americans down’t turn around and spend their tax-savings, they put it into their 401Ks or stock portfolios. It happened in the 80s and it happened in the past administration. The fact is, that folks on main street never get the trickle.
And, no, this is not a snowball effect of the past 20 years. Look at deficits, economic growth and job creation trends that occured between Reagan and today.
And the mouse thing – Twyla, you know what? It was entirely fabricated. Yes. Fabricated. There is nothing in the bill to support your claim. NOTHING. Created by Republicans to distract people and create a crisis of confidence in the bill. The fact that you throw “mouse research in Nancy Pelosi’s state” shows how little research YOU’VE done on the bill.
http://www.huffingtonpost.com/2009/02/12/pelosis-mouse-explained-w_n_166442.html
I’m thinking that $65 a month is just enough to cover a cleaning lady to come in once a month. Hey, I’m creating a job! (admittedly, not much of one)
Well, we won’t benefit from the payroll tax adjustment, since I was laid off in November, but we will benefit bigtime from the COBRA subsidies also in the stimulus package. 65% of the $1300 (yes, $1300) per month that COBRA costs our family is $845 in savings. Every month. So I’m pretty thrilled, to say the least.
With a husband who was recently laid off from his job, and now as the family breadwinner, I will most definitely use the extra $65 to offset the amount of bills from doctor
i don’t get it … what about freelancers who get 1099 income. Nothing for us, I guess?
Laundry and Children: Sounds like a very clear definition of the trickle down theory that I truly believe in. The problem that we run into is that the theory takes into account all people be of good nature. Unfortunately, some rich folks just aren’t too trustworthy with the money that they should be trickling down. I still believe the theory is better than the government handing it out to make us more dependent on them.
lovedannygansle: Wow, occasionally throw out a stimulus check?? One time is not “occasional” it is once. The last 8 years did not bring on this crisis. I believe it was the last 20-30 or so years that had a snowball effect.
I am skeptical of this stimulus plan working at all. There sure is a lot of money in the bill to help the Smithsonian and mouse research (yes, in Nancy Pelosi’s state) and other spending that will have little to no effect on the overall econonmy. Any money is appreciated but I do think a whole lot could have been cut out of this bill to help the average American along with the business owners.
I’ll be spending that $65 a month. I hear so many people saying that we shouldn’t spend a dime more than necessary, etc., but I’m not sure they’re on the right track. For one thing, if Americans bought nothing but what we absolutely need, our economy will crash and burn. For another, if things continue as they’re proceeding, money might well be useless by this time next year. Better to spend it and enjoy it while it still has value.
It probably wouldn’t be a bad idea to spend it on things like seeds, garden utensils, canned food, etc., either.
Re: daycare costs- it averages $29 in my city, which is the 4th largest city in my state. I found out from my sister (who lives in Boston) that her daycare costs over $80 a day. I nearly died when I heard that. Of course, her wages are far higher than mine. But 2.5 times more? No.
So for some people, this money will mean a lot. For others, the cost of living might be so much greater than their higher-than-average wages that it does come out paltry. But I’d rather that I got a tax cut, no matter how small, than that same cut going to the uber-rich.
Laundry-
Don’t think that the minimal tax break was meant to “buy” the American people, not a gimmick as you suggest – no one, not even Obama is suggesting that the extra $65 is going to make the difference.
The tax structure needed to be restructured so that the greatest benefit would no longer be given to the wealthiest Americans (who simply grew wealth in the past 8 years, instead of injecting that wealth back into the economy).
As I stated earlier, taxes are a minicule part of what makes up a budget. The bigger impact of this plan will be felt in the areas where the bulk of the money is spent boosting the economy, rather than in our paychecks (although, the latter will ultimately be aided in a stronger economy). Setting a lofty goal of cutting the 1.3 trillion dollar deficit in half by the end of his first term is no small feat. I suggest you watch his State of the Union speech tomorrow night to see the intent of his economic plan. It is NOT about creating dependence on the goverment, but rather to boost job creation – an area that suffered greatly under W.
Jeanne, you made my point exactly. If we help the grocery store owner or the coffee shop owner or the land scaping business or the construction business (with contracts) ect., we would be allowing them to put that money to work by hiring or keeping more people. Then those people, who worked for the money, would go out and spend it and those business that they were shopping at would do better and on and on and on.
They way they are handing out the money is not meant to help create jobs, it is about training people to rely on the government to keep things going.
Also, I wasn’t saying that the size of the checks, i.e. $65 is an insult to our intelligence. It is the fact that they are trying to convince the American people that this package will actually have any effect by giving each family $65 a month. Can the American people really be bought for so little?
Thanks love danny: I think what people forget is that when they cut out the dinky latte, they put a hurting on the coffee shop owner, who had to cut staff, so that barista isn’t spending money on daycare because she’s home and so on and so on . . .
The smaller sums put into your paycheck aren’t going to change YOUR life, that’s up to you, really. But that extra $13 spent at the grocery store helps pay a grocery clerk for an extra hour, so she can in turn go out and buy an extra pair of shoes for her son, and the shoe store owner can pay a store clerk for half an hour, and that clerk can go out and buy a pair of jeans . . .
The little things may not create new jobs, no, but they could help keep current jobs alive!
Jeanne-
I actually appreciate this piece, breaking down what the tax cuts would mean for people. My commment was directed at those who feel like they should be receiving a more substantial sum.
Laundry-
The stimulus package isn’t entirely about giving people a windfall in tax savings. The previous administration based it’s entire economic plan on “lower taxes” and occasionally throw out stimulus checks. It did nothing to boost the economy and create jobs. Economists have made this point for years. The lowered taxes in Obama’s plan is just a small part of the stimulus package.
I wish this piece or others adressing the stimulus would focus on the big picture of what the stimulus is meant to do. Giving aid to those who face forclosure, creating jobs and directing money to issues such as education and healthcare are what will revive our economy, not the “latte” money that people are bitching about. People aren’t thinking of cruises, Laundry, they’re trying to survive.
To say that 65$ is paltry is partially correct. It’s really not a lot of cash. However, its not an insult to our intelligence.
It’s better for the government to pump dollars into the economy to revitalize infrastructure and give people jobs than to give Americans more cash. The above comment is just enough proof as to why tax cuts aren’t a good idea. People don’t spend them, and while saving is generally a good thing, a government’s policy shouldn’t be to give people more money to save. It should be to use monetary policy to jump start the economy.
In other words, its not a lot of money but its all we should get.
My sons daycare averages $27 a day, includes breakfast, lunch and two snacks. $65 is two tanks of gas or a week of groceries. I am happy that something is being done instead of a adminstration that will admit no wrong, increase their salaries while I have to get on state aid to have health care for my son. I do not want to be bitter and complain like so many anti Obama people but I honestly hope that the changes are successful and those people eat crow. If you are not happy with what is going on, then take it upon yourselves to make a difference instead of whining about those who do.
I’ve read in a few places that the “95 percent” is really a fudging of the numbers. Anyone know more about this?
The fact that this $65 is supposed to be spent, not saved, is really interesting. Now that I’m aware of it — $65 more to savings every month! =)
I guess you can’t make all the people happy all the time.
I am a single mom so I guess it’s $26.00 a month for me. That’s not even one day at daycare. But it is one box of diapers I do not have to worry about.
I live in Dallas Texas and I pay $30.00 a day with breakfast, lunch, two snacks and a curriculum. If you are paying $75.00 a day I hope they are sending your kid home with drawings made of gold & silver.
It’s not going to help us. We are self-employed, we have to pay our own taxes quarterly and won’t see the money. We get to deduct it when we file our 2009 taxes next year.
That $65 really would have helped. Health insurance is really expensive when you buy it yourself.
Em: Move to the boonies. My friend pays $30 a day – they feed her son breakfast and lunch AND have a nursery school program.
Where is this mythical place where $65 buys two days of daycare? My son goes to a cheap daycare, and it’s $149 for two days.
$65 a month. Book – the – Cruise!
I have 6 people in my family so that is and extra $10.83 per person a month. WOW!!!!! He really is a GREAT president!
I don’t want to buy a latte. I want people to have enough money to buy things that will really get the economy moving again. The only way to do that is to create jobs. And the only way to create jobs is to give the money to people who create jobs. Something like 75% of jobs in this country are with small businesses and yet the stimulus plan with all of it 700+ billion dollars of stimulus gave a paltry 1 billion to help small businesses. Do we really want to create jobs when we don’t help the people who actually create jobs? This $65 a month is an insult to the American people’s intelligence.