THE STIMULUS PACKAGE

There's almost something for everyone in the $787 billion stimulus package that was recently signed into law. Help will come in a variety of ways, from an $800 tax credit for working families to a tax break if you buy a new car or a new home. But the unemployed and low- to middle-income families stand to benefit the most. For example, the bill will extend unemployment benefits through the rest of the year and increase them by $25 a week. Anyone on Social Security will get an extra $250 payment, and those on food stamps could see a monthly increase of $25.

Help for the jobless

With the number of unemployed approaching 12 million nationally and 250,000 in Massachusetts, the package will extend benefits to 46 weeks and boost weekly payments by $25, which could begin showing up in checks within weeks. The maximum benefit in Massachusetts will increase to just over $650 a week. In addition, the first $2,400 in benefits will be exempt in 2009 from federal income taxes, putting a little more money into the pockets of the unemployed.

Extending unemployment benefits is among the most effective stimulus measures, according to an analysis by Moody's Economy.com. Each dollar of benefits generates about $1.63 of economic activity. compared to $1.22 for a one-time tax rebate, according to the analysis.

Healthcare

A key provision provides a federal subsidy for laid-off workers to continue buying health insurance from their former employers. Under COBRA laid-off workers can continue their health insurance through the employer, but must pay the full premium, which usually exceeds $1,000 a month for families. The stimulus will give workers a 65 percent subsidy for nine months, and help an estimated 7 million people. The subsidies will go into effect immediately. Unemployed workers will pay 35 percent of the premium, and employers will cover the cost by deducting the amount from their federal payroll taxes.

"This is going to be a real plus for people who would like to have health insurance between jobs," said Stuart Altman, a professor of health policy at Brandeis University.

Tax cuts for workers

Individual workers will get a $400 tax credit and couples $800 in 2009 and 2010. Unlike last year's stimulus program, which sent out one-time checks, the stimulus will take less tax money from workers' paychecks. The tax cut, estimated at about $13 a week in 2009, will begin showing up in June. The tax cut is targeted at low- and middle-income workers. Individuals who make more than $95,000 and couples making more that $190,000 won't get it.

Social Security bonus

Social Security recipients who don't qualify for tax credits because they don't work will get one-time $250 payments. The legislation calls for the Treasury to begin sending checks as soon as possible. Thanks to a provision pushed by Senator John F. Kerry and Representative Richard Neal, a Springfield Democrat, about 1 million retired state and local workers who don't collect Social Security will also get the $250 checks. In some states, including Massachusetts, government employees pay into a state and local retirement systems instead of Social Security.

Help for low income

Needy families who qualify for food stamps will get an increase in benefits to help offset rising food costs. Patricia Baker, a policy analyst at the nonprofit Massachusetts Law Reform Institute, which advocates for the poor, said she expects benefits to start hitting pocketbooks as soon as this spring. Benefits for a Bay Stater on food stamps, she estimated, could go up by roughly $25 a month.

Low-income families in need of child care will also get help through a $2 billion grant that will provide services to an additional 300,000 children. Congress is also including $2.1 billion to allow an additional 124,000 children into Head Start and Early Head Start.

-Adapted from “What the $789b stimulus would do for consumers” By Robert Gavin and Erin Ailworth, The Boston Globe, February 13, 2009 at http://www.boston.com/news/education/higher/articles/2009/02/13/what_the_789b_stimulus_would_do_for_consumers/, retrieved 2/26/09.

2/09