These days, the United States government is trying all sorts of tactics to revive a dismal U.S. economy and slumping stock market. In early 2008, Congress passed an economic stimulus package that put cash (commonly known as tax rebates) in the hands of almost every tax-paying citizen. In late 2008, the Federal Reserve announced an unprecedented fed rate cut that slashed the federal funds rate to a target range of 0 to .25 percent. In recent days, the media has highlighted the possibility of yet another government action – an economic stimulus plan during Barack Obama’s first weeks of presidency.
Talk of an Obama Economic Stimulus Plan: Ways to Revive a Bad U.S. Economy
Infrastructure Projects, Tax Cuts, New Job Creation
How can president-elect Barack Obama combat the slowing economy? Two ways are via infrastructure projects and tax cuts. Both would create new jobs.
He could spend money on infrastructure projects which would create jobs and pump cash into the economy. Obama could lower taxes, which would leave more cash in consumers’ and businesses’ bank accounts. Individuals with more cash on hand might spend more money; companies with more cash on hand might hire more workers.
2009 Economic Stimulus Package Definition: What is an Infrastructure Project?
The Investor Words website defines infrastructure as the basic physical systems of a community, essential for enabling economic productivity. Coupled with the Merriam-Webster definition, infrastructure can be thought of in laymen’s terms as the systems or buildings necessary for an economy to function. So, infrastructure projects could logically include improvements to or overhaul of any of the following: roads, bridges, airports, pipelines (water, oil), sewage systems, power plants, and telecommunication systems.
Why the focus on infrastructure projects?
- They create jobs.
- They pump cash back into the economy.
U.S. government money (raised through taxes or perhaps borrowed) would be funneled into local economies. Companies that provide the services and materials for infrastructure projects would need to hire more people (presumably, those who are currently out of work). Cash would flow through businesses, into the hands of citizens, and back to the government in the form of taxes. If profits are up, company leadership will feel more confident about the future and resume or increase hiring. If profits are up in publicly traded companies, investors will feel more confident and resume or increase investment in the stock market.
Green Projects Part of 2009 Obama Economic Stimulus Plan?
Barack Obama may conceivably tackle two issues at once, the economy and the environment, by slating economic stimulus money for environmentally-friendly (“green”) projects. For instance, a new building could incorporate energy-efficient technology. This would open up opportunities for different types of jobs. Workers might need to be trained on new skills and non-traditional white-collar jobs may be in high demand (think: environmental lawyers).
Other examples of green projects:
- High speed mass transit and bus systems
- Energy efficiency upgrades like improving building insulation, stopping energy leaks, or installing energy-efficient appliances
In the days leading up to Obama’s inauguration in January 2009, the media will highlight the need and expectation of government stimulus to save the American people from financial crisis. Discussed above is what a 2009 economic stimulus plan might bring to the American people. In addition to the elements above, U.S. taxpayers may see another tax rebate check or relief in the form of tax credits.
Lena Gott - Lena Gott is a Certified Public Accountant who gives practical financial advice to her readers.
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