The Stimulus Package: Meaning, Form, and Who Offers Essay

Exclusively available on IvyPanda Available only on IvyPanda

Introduction

A government’s attempt to resuscitate an ailing economy by pumping in money is usually described as an economic stimulus plan. The strategy can take various forms. For example, it could be through taxation cuts, reduction of the rates of interest on loans, and so on. This is the strategy whereby money not in use by business owners and consumers is utilized through the stimulus plan. A stimulus package usually targets placing a blockade under the recession. This opens the way for growing profits. On many occasions, economists have regarded cutting down interest rates charged by the Federal Reserve as the most efficient way of stimulating development and especially investments. Nonetheless, the economy could still witness a downfall despite efforts by the government to resuscitate it. This was the case in 2008 when the Federal Reserve was charging zero rates on loans.

We will write a custom essay on your topic a custom Essay on The Stimulus Package: Meaning, Form, and Who Offers
808 writers online

Likely success of the plan

It is almost impossible if not impracticable to try a detailed analysis of a bill that is 1,041 pages and only a part of it has been made public. However, in broken strokes, the bills led to the approval of $787 billion for the stimulus package. 287 billion was set to cover for tax cuts, unemployment compensation, and possibly Medicaid got 191 billion and 311 billion dollars are to be spent on discretional effects like infrastructure which will include roads and health facilities (Turner 45). The income tax has been scaled down though.

If the plan results in increased job opportunities then the plan will be considered a big success. The economic plan utilizes Keynesian economics whereby increased government spending will channel money to the people, the consumers, and in turn economy will improve. This is also by the fact that it’s the mandate of the government to take the initiative and save the country from recession by spending when there are economic problems. This is bound to pull the country out of recession and propel the economy (Turner 45).

The success expected includes the repair of the crumbling infrastructure of the US. This includes the railway system, water line, roads, power line, airports, and electricity network, and so on. There will be the need for vital assistance to the besieged local school to stop unnecessary dismissal and cutbacks and also increase salaries for the teachers. The public transport systems will be expanded and a high-speed passenger train system introduced. The plan also spends 116 billion US dollars on tax cuts/relief on families (couples jointly) and individuals than earn less than 150,000 and 75,000 dollars respectively per year (Davis and Obey 65). The unemployment benefits will be increased to 24 dollars since the unemployment package received a boost of 40 billion UD dollars. The medical cover for the military personnel would increase as well as for their families. One billion dollars would go for veteran administration. This section had suffered a serious setback in the Bush administration. The plan also takes care of a food program for the Americans, where 150 million dollars would be for refilling food banks. The senior citizens will benefit from an additional 100 million for meal programs and finally, the student will have 100 million for free lunch at school to support the no child left behind the initiative (Davis and Obey 65).

Measuring success or failure of the plan

The major problem facing the success of the stimulus package would be gauging the progress of the economic plan. Initiatives like improving the infrastructure, building energy plants, and offering financial relief for poor families like tax reduction. There needs to be efficient utilization of energy and social amenities. Assessing growth will reveal the progress of the plan (Turner 45). Although there are promises of creating jobs, nonetheless, it is still very hard to estimate the actual benefit of the plan. Economists have suggested that jobs will be monitored through economic cycle research. The employment index will be analyzed. Assessing the interests is likely to give a clear picture. If they remain low, the plan is succeeding, but when they increase over normal limits, then it would be a flop (Davis and Obey 65).

It is very hard to obtain a definitive answer as to whether the plan is succeeding or not. It will be very hard to judge the actual benefit resulting from the economic pan basically because there is no other standard flow or a comparative package (Turner 45). Americans do not know how the economy would fare without the plan. It could have been easier if there was a trajectory of the progress of the economy if there was no stimulus plan (Davis & Obey 65). It’s not possible to compare what the progress is with stimulus against what happens without it.

The government promised that unemployment would go down from the 7.6% rate and would not again go beyond 8%. However, by 2010, the department of labor had recorded a 10% unemployment rate and was still on the increase. This excludes those classified as under-employed otherwise the rate would be 27%.

1 hour!
The minimum time our certified writers need to deliver a 100% original paper

The political inclination is going to affect the judgment of the success of the economic plan. Democrats would want the project to be considered a success of that they can be able to retain their seats come next elections. Furthermore, they would not like to be associated with failure, and in that regard, they would try to find out the slightest benefit and expound on it rather than also look at the negative sides of the project. The government was under pressure to introduce fiscal intervention (Davis & Obey 65). Congress had to make a critical decision for the country. The economic plan is not a magic bullet for American problems or specifically the recession but, it’s a booster to the economy. People no longer have confidence in the economy; so much wealth was lost and the crunch became more intense. This means that the US will struggle to regain stability. The economic stimulus is going to mitigate the economic problem (Turner 45). There will be the enactment of the recovery and reinvestment act which encourages tax cuts.

Works Cited

Davis, Christopher M and Obey, David. Economic Policy Crisis and the Stimulus: Analyses of the American Recovery and Reinvestment Act (ARRA) of 2009 HR 1, 111th Congress (Government Series), Washington, D.C., TheCapitol.Net 2009.

Turner, Samuel. Economic Stimulus: Plans, Risks and Outlook; Global Recession – Causes, Impacts and Remedies, Hauppauge, NY, Nova Science Pub Inc, 2010. Print.

Print
Need an custom research paper on The Stimulus Package: Meaning, Form, and Who Offers written from scratch by a professional specifically for you?
808 writers online
Cite This paper
Select a referencing style:

Reference

IvyPanda. (2021, December 28). The Stimulus Package: Meaning, Form, and Who Offers. https://ivypanda.com/essays/the-stimulus-package-meaning-form-and-who-offers/

Work Cited

"The Stimulus Package: Meaning, Form, and Who Offers." IvyPanda, 28 Dec. 2021, ivypanda.com/essays/the-stimulus-package-meaning-form-and-who-offers/.

References

IvyPanda. (2021) 'The Stimulus Package: Meaning, Form, and Who Offers'. 28 December.

References

IvyPanda. 2021. "The Stimulus Package: Meaning, Form, and Who Offers." December 28, 2021. https://ivypanda.com/essays/the-stimulus-package-meaning-form-and-who-offers/.

1. IvyPanda. "The Stimulus Package: Meaning, Form, and Who Offers." December 28, 2021. https://ivypanda.com/essays/the-stimulus-package-meaning-form-and-who-offers/.


Bibliography


IvyPanda. "The Stimulus Package: Meaning, Form, and Who Offers." December 28, 2021. https://ivypanda.com/essays/the-stimulus-package-meaning-form-and-who-offers/.

Powered by CiteTotal, easy bibliography maker
If you are the copyright owner of this paper and no longer wish to have your work published on IvyPanda. Request the removal
More related papers
Cite
Print
1 / 1