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Factors of the $787 Economic Stimulus Package Research Paper


The $787 stimulus bill was approved by President Obama on February 17 2009. It is one of the most expensive bills to be ever passed in the history of the United States. It received a minimum votes from the Democrats and none of the Republicans voted for it. This paper looks at the over view of the stimulus package, ideology and arguments of a Republican and a Democrat, and concludes by giving a personal view of the bill.

Overview of the $787 Stimulus Package

The $787 stimulus package was passed into law on February 15 2009. President Obama gave his final approval despite the opposition from the Republicans. The purpose of the bill was to jumpstart the economy of the United States which was negatively affected by the Great Depression.

It was passed by the Senate through a minimum vote of 60-30; just what was required for the bill to be approved. The stimulus’s main elements are; job creation, improvement in health care, tax relief for families, and development in infrastructure, education, and energy sector (Calmes & Carl, 2009). The costs included:

  • $40 B for creation of employment opportunities and increasing the unemployment benefits
  • $46 B investment in infrastructure
  • $115 B income tax credits
  • $5 B low-income programs
  • $6 B grants

The Stimulus bill is the most sweeping bills in the history of the U.S. and its passage was not without difficulties. Democrats and Republicans engaged in arguments some discussing for and others against the bill. None of the republicans voted in favor of the bill.

Moreover not all the Democrats voted for the bill as seven members voted against it. The Democrats argued that, the bill would create more than 3 million job opportunities while the republicans argued that, if the bill was passed into law, the future of the economy would be threatened and would be saddled with debt. They also noted that they had been given very little time to read and understand the enormous bill before it was released and the decision to pass the bill was not just.

The approval of the stimulus bill was expected to help all U.S. citizens, for instance new buyers of a car or a house would benefit from modest tax breaks on their purchases. It would also benefit low income earners through tax relief. It would provide Americans with a tax credit worth $400 for singles, and $800 for married couples.

The taxpayer’s paycheck would increase by almost $8 on a weekly basis because of the tax credit which in turn would increase consumer spending. Retirees and disabled individuals would receive a tax credit worth 250 dollars and the unemployment benefits were increased (Calmes & Carl, 2009).

At the start of the negotiation process, the Republican had proposed a $440 billion bill including a stop measure to freeze in more spending on the GDP after a positive growth. On the other hand, the Democrats had proposed a $900 billion bill without stop gaps.

After a long discussion, three Republican and Democrats agreed on a $780 billion although it was later adjusted to $787 billion which was approved and signed into law. Many Republicans were against this bill and argued that it would significantly increase government spending resulting in deficits in GDP and international debts.

Ideology and Arguments of Republican Sen. Lindsay Graham

Sen. Lindsay Graham (the Senate Budget Committee for South Caroline) is one of the Republicans who were strongly opposed to the bill. According to him, the bill was doomed to fail. This is because the bill would spend over one trillion dollars of the state’s money in a span of 10 years. Moreover, the bill does not have stop-gaps measures for economic recovery.

This means that if the bill is to be successful, government expenditure will have to increase considerably. Graham noted that only 11% of the bill would hit the economy in first year, and over 50% would not be spent in two years time. He also noted that the bill did not include the banking sector and it didn’t have anything to do with the housing market (Quinn, 2009).

However, most democrats hold that these matters do not have anything to do with the economy, although, in reality, they are among the problems derailing the economy. Graham argued that, if the bill had focused more on housing and banking, the nation would have an opportunity to help its economy. The banking and the housing sectors are the economic engines in most of the developed countries and they play a great role in the financial sector.

Graham refuted the Democrats argument that the bill will create jobs and that it would improve the economy. According to him, the democrats just rely on platitudes and not facts in making their arguments. For instance, they discuss about President Bush, but do nothing about the package. He commented that, “The people spoke, and I don’t think this is what they had in mind” (Issenberg & Globe, 2009).

According to him, the over 1, 000 page bill was an act of theft that would adversely affect the government by increasing federal deficits. Several of the Republicans noted that Obama’s approval of the massive bill without their cooperation was a betrayal of his campaign rhetoric concerning bipartisan consensus.

Graham said that “If this is going to be bipartisanship, the country is screwed. I know bipartisanship when I see it. I’ve participated in it. I have gone back home and gotten primary opponents because I wanted to be bipartisanship” (Amanpour, 2009).

His rejection of the bill was based on lack of bipartisanship. The whole process was not bipartisan, it was a rammed process. It had been started with the idea that the democrats will win in writing the bill. The Senate was not even given enough time to read the 1,079 bill and be able to correct some of its clauses. For instance, Graham wondered about the connection between AMT and job creation which was included in the bill.

Graham was not actually against the bill, but the gigantic spending which was not appropriately allocated. He would have supported the $440 billion bill since it included all that the government wanted to do to bring change, for instance, it cut taxes, had investment in infrastructure, and helped the unemployed people.

What he did not understand is the need for the government sweeping stimulus package. Graham disapproval on the bill was based on facts that were not included in the bill. During a debate aired by the ABC news, Graham agreed that there was need for a stimulus package that focused on job creation.

However, according to him 11% of the appropriated money was to be spent in 2009; this means that a large percentage of the money in the stimulus package is entitled to spending and is not aimed at creating jobs. About 27% goes to tax cut, and this is a very small percent because only $3 billion in given to small business which should have the biggest focus since more than 75% of the residents in the U.S are employed in small businesses.

This means that out of $787 billion, only $3 billion goes to small businesses. This is not enough to create new job opportunities. This is where the Democrats missed the mark, instead on focusing on facts, they focused on issues that were not directly related to the mission they had at hand. If the bill was given more time, it would have been amended appropriately and would have received a majority votes (Anon. 2009).

Ideology and Arguments of Democrat Sen. Chuck Schumer

According to Sen. Chuck Schumer (the Vice of the Joint Economic Committee), the bill would strengthen the nation’s economy by creating job opportunities for millions of U.S. citizens, it would also deliver a tax relief for majority of the workers (95%), help in the development of infrastructures particularly in the rural communities, create a positive impact on the education sector, and help in the improvement of the energy sector.

He notes that U.S. have had the worst economy since the era of the Great Depression and more than five hundred thousand people had been losing job opportunities every month. There was need to create more jobs and also preserve the ones which were still in existence (Saltonstall, 2009). This could not be done without the government having to incur extra costs in terms of spending. According to him, the stimulus bill would therefore be a strong package towards economic discovery.

It would create more than 3 million jobs, it would increase the income of the middle class thereby increasing their spending patterns which in turn would boost the economy, and it would create a good infrastructure that makes traveling to and from work easy. Schumer differed with Graham’s argument that the stimulus bill was not good for the small businesses. According to him, the bill would help small businesses to expand thereby creating jobs.

It would allow them to take up losses that had been incurred instead of paying taxes. And also the economic plan had made significant consideration for the small businesses. He however admitted that the stimulus bill was not perfect, but it was much better than doing nothing about the situation.

It may seem that the bill is taking a significant part of the budget, but the results are worth it. By investing in infrastructure, especially roads and rails, the rural areas will be developed thus creating more job opportunities. People will have greater access to social amenities including health care services. Schumer did not find a reason for voting against the bill. According to him, the bill encompassed all sectors of the economy.

For instance it focused on infrastructure development including water and sewer, energy and arts which is a key engine of economic growth in New York (Galbraith, 2011). Most of the people who voted against it are still the ones who had proposed that some things be taken out of the bill which was done. Schumer did not understand why they still voted against. He noted that the biggest amendments made to the bill were suggested by the Republicans, for instance the $70 billion, $38 billion for the AMT, and housing relief.

There was no reason for opposing the bill since it had been amended as people had requested. He noted that “every one of the 435 House members and 100 senators can find some provisions they didn’t like in this bill” (Amanpour, 2009), but that was not reason enough to vote against the bill.

There is nothing that is perfect and everything has its positive and negative side. Supporting the bill was an indication of the need for economic recovery from the effects of the Great depression (Baker, 2010). People need to come and reason together if a nation is to develop.

What Schumer did not understand is why people would talk about the expensive bill but they never talked about the $1 trillion used during the Iraq war or the deficits of $800 billion incurred when George Bush was president. There was a reason to oppose the deficit spending, but there is no reason enough to oppose the tax cuts.

Personal Opinion

A bill that is expected to spend such a large sum of money should be discussed at length and every member concerned should be given ample time to air his/her view. It is true that the bill is a path into economic recovery, but the amount is gigantic. Spending a lot of money does not mean that the end results will be perfect rather the approach used determines the results. The banking sector has for a long time been known to be a key engine of development.

Every activity done by the banks involves interests and there is no business activity that does not require the services of a bank. Instead of increasing the unemployment benefits and tax relief, the bill should have focused more on increasing youth funds, or other funds to be given out to entrepreneurs. This would result in job creation and the government would earn interests. The small businesses should also be given a larger percentage since most of the people are employed in these businesses which are not well developed.

The passage of the bill by President Obama was rather a rush move given that it was his first bill to approve. I think he should have given the Democrats and the Republicans a longer period of time to discuss over the content of the bill. There is no single person who can be able to read and understand a document containing more than one thousand pages in a few hours.

Moreover, the document in question is a public policy that should not be passed anyhow. Having all Republicans vote against the bill was not a coincidence but serious matter. It may even seem that some of the Democrats voted for the document, not because they fully understood its contents, but because they were in favor of it from the initial process.

Reference List

Amanpour, C. (2009). This week ‘Transcript: stimulus debate. Web.

Anon. (2009). . Web.

Baker, P. (2010). Education of a President, the New York Times Magazine.

Calmes, J. &Carl H. (2009). Obama Considers Major Expansion in Aid to Jobless, The New York Times.

Galbraith, K. (2011). Obama signs stimulus packed with Clean Energy Provisions. The New York Times.

Issenberg, S. & Globe, B. (2009). Congress Approves $787 Billion Stimulus Package. Web.

Quinn, J. (2009). The 2009 Stimulus Package: A $787 Billion Horror Story. Web.

Saltonstall, D. (2009). New York Gets Big Slice Presidents Obama’s Stimulus Package, Thanks To State’s Congressional Bigs. Web.

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