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Congress May Extend Stimulus by Almost $100 Billion

By Dave Eberhart   |   Friday, 31 Jul 2009 12:54 PM

February’s $787 billion stimulus jolt to the economy has proven so addictive that there is now pressure to extend some programs to the tune of another projected $88 billion, according to a report in The Hill newspaper.

A few measures under consideration:

  • Democrats are aiming to extend unemployment and health benefits - now set to expire at the end of the year. These benefits made up about $65 billion of the February stimulus.

  • Both Republicans and some Democrats are calling for an extension of a tax break expiring at the end of the year that permits businesses to write off losses. The provision cost $15 billion in the February stimulus. The so-called “carryback” provision permits businesses to carry back losses to past tax returns - allowing them to free up capital for investments.

  • Patrick Tiberi, R-Ohio, is touting an extension of expiring tax credits for first-time homeowners and car buyers to the combined tune of $8.3 billion. The National Association of Realtors has jumped on that bandwagon, pushing to extend into 2010 the $8,000 tax credit for new home buyers - set to expire at the end of November – and further offering it to all home buyers.

  • Some Democrats would also extend federal subsidies for healthcare coverage to the unemployed under the COBRA program. The subsidies that reduce COBRA premiums by 65 percent cost some $25 billion.

    With an unemployment rate at a 26-year high, Rep. Maxine Waters, D-Calif., a supporter of the federal subsidy, told The Hill, “It does not appear that there is any real hope in sight for new job creation and for jobs for the people that need them perhaps the most. So we’re going to have to do something.”

    Meanwhile, with the stimulus proving very slow as a job creation tool, President Barack Obama’s poll numbers continue to slip, according to a report in the Chicago Sun-Times.

    In a speech this week, Obama took an optimistic stance: "We have stopped the freefall. The market's up and the financial system is no longer on the verge of collapse. So there's no doubt that things have gotten better."

    Buttressing the President’s optimism, a Federal Reserve survey of 12 regions of the country found the recession was easing or economic activity was stabilizing in June and July, raising hopes that the recession is indeed losing steam.

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