Presidential Candidates Respond to Bush Economic Stimulus Plan
Though he would not say for certain that the United States is moving in the direction of a recession, President Bush announced an economic stimulus plan of $150 billion in order to boost the economy through a combination of consumer spending, business investment incentive and housing reform. In particular, Bush indicated that the package of business growth incentives could create as many as 500,000 new jobs by giving businesses the incentive to hire new employees.
The consumer spending portion of the plan would eliminate the 10% tax bracket temporarily for the upcoming tax season. This tax break would be made in the form of early rebate checks for all taxpayers from $300 to $1800, depending on income level.
Each unmarried individual would receive up to $600, while each married couple would receive up to $1200, or twice that amount. Married couples would also be reimbursed for up to two dependents, at $300 each. Thus a married couple under the middle class income threshold with two children or more would receive the maximum rebate of $1800.
The business investment portion of the spending plan would provide tax credits of 50% on fixed assets purchased for businesses, and the limit of expense deductions would be raised to $250,000, double its current amount.
Related to housing reform, the economic stimulus plan would raise the mortgage-purchasing limits of the government agencies Freddie Mac and Fannie Mae from $417,000 to $729,750. This would provide more mortgage security for many homeowners looking to get out from under the controlling hand of subprime mortgage lenders.
The bill has been introduced into the House of Representatives as H.R. 5140 and passed with a vote of 385 to 35. However, fierce Senate opposition has challenged it, with Senate Democrats anxious to include provisions for all citizens, including those exempt from taxes, as well as other provisions.
As you would expect, the current crop of presidential candidates immediately chimed in with plans of their own, in order to demonstrate their leadership capabilities during this crucial primary period. Many of their goals also contained proposals for long-term economic stability, what they would propose to continue while in office.
On the GOP side, here are the proposals offered by the two candidates who brought forth economic plans, Mitt Romney and Ron Paul:
Mitt Romney's economic stimulus plan:
- For individuals:
- reduce the lowest income tax bracket
- permanently eliminate the income tax on seniors
- eliminate taxes on savings for the middle class.
- For businesses:
- Tax credits on equipment expenses of 100% over two years
- Housing:
- Qualify more people for Federal Housing Administration mortgage loans
Cost: $233 billion.
Ron Paul's economic stimulus plan:
- Tax reform:
- eliminate taxes on dividends, savings and capital gains
- eliminate taxes on social security benefits and income tax on senior citizens
- eliminate taxes on tips earned by service workers, waiters, etc
- Spending reform:
- Reduce overseas commitments in places like Korea, Japan and Europe
- Freeze non-entitlement spending at current levels
- Monetary reform:
- Legalize gold and silver as a competing currency
- Regulatory reform:
- Repeal regulations on small businesses like Sarbanes-Oxley
- Expand power of smaller, community banks
Cost: No amount given.
On the Democratic side, the two remaining candidates offered economic stimulus packages of their own intended to jumpstart the economy:
Barack Obama's economic stimulus plan:
- For individuals:
- $250 checks to low and middle income earners
- $250 more to senior citizens, the most likely to spend quickly
- Housing:
- $10 billion foreclosure rescue fund for "responsible" families
- Funds for local and state governments in highest foreclosure areas
Cost: $75 billion, plus a reserve of $45 billion for use if needed.
Hillary Clinton's economic stimulus plan:
- Housing:
- $30 billion Emergency Housing Crisis Fund for local assistance in hard-hit areas
- 90-day moratorium on subprime mortgage loans
- 5-year freeze on interest rates
- Investment:
- $25 billion in energy-bill assistance for low-income families
- $15 billion to expand unemployment insurance and make investments in alternative energy
Cost: $70 billion.