Track the Stimulus

(2) To assist those most impacted by the recession.

(3) To provide investments needed to increase economic efficiency by spurring technological advances in science and health.

(4) To invest in transportation, environmental protection, and other infrastructure that will provide long-term economic benefits.

(5) To stabilize State and local government budgets, in order to minimize and avoid reductions in essential services and counterproductive state and local tax increases.

Of the $787.2 billion stimulus, $287 billion will come in the form of tax cuts and tax breaks for individuals and businesses, $308 billion in discretionary spending, and $192 billion for direct aid spending to states and programs serving individuals in need (e.g. Medicaid, unemployment assistance, health insurance subsidies).

On the tax cut and break front, for individuals the bill introduces a "Making Work Pay" tax credit, it provides relief to middle-class earners affected by the Alternative Minimum Tax (AMT), it expand the Earned Income Tax Credit (EITC), it increases the refundable portion of the child credit, it provides educational and home and vehicle buyer tax-credits.  The total costs for these items are approximately $233 billion as estimated by the Congressional Budget Office (CBO) in its Cost Estimate for the conference agreement for H.R. 1.

The following tables provide an illustration of the tax provisions under the "Make Work Pay" provision, and the EITC provision - (Please note: the paragraphs above and the tables are for illustration only and DO NOT constitute tax advice - please consult a tax expert on the matter)

  Source: H.R. 1 Bill

In addition to tax breaks individuals will benefit directly from federal aid to fund unemployment benefits and other programs that assist struggling families at the tune of $57.2 billion, and health insurance assistance costing $25 billion.  The over $90 billion in State fiscal relief are in its majority targeted towards providing Medicaid relief as the needs for those programs increase and state revenues decrease.

Some interesting and novel proposal included among the tax incentives/breaks and the direct aid funding include:

• Subsidy for laid off workers (between 9/1/08 and 2/28/10) that are eligible for COBRA health insurance benefits.  The government will subsidize 65% of the premium for 15 months at a cost of $25 billion (legislation signed in late December 2009 expanded coverage to 15 months from 9 and eligibility to February 28, 2010);
• Small businesses (defined as revenue below $15 million) will be able to carry back Net Operating Losses (NOL) incurred in 2008 or 2009 for up to 5 years;
• $14 billion in tax incentives for production and use of renewable energy sources, and $4 billion in tax incentives for making buildings and residences more energy efficient;
• Close to $17 billion in incentives to doctors, hospitals and clinics (Medicare and Medicaid providers) to adopt Electronic Health Records - these investment is expected to reduce substantially the administrative costs of providing health care and ultimately result in better care for patients.
  

Discretionary Spending
Quick use of the funds is one of the priorities for Congress, as such one of the goals is to invest 50% of the money in projects that will have a start date on no more than 120 days from the time when the Act is enacted.  

To make sure that the funds are spent in accordance to government rules and regulations and are directed towards the uses specified by the Act, Congress is calling for over $300 million in additional funds to be allocated to the Inspector General offices of federal departments that will be disbursing ARRA funds and to other agencies in charge of overseeing these funds.  In addition, there will be a seven person Accountability and Transparency Board that will oversee the Federal funds disbursed because of this Act. 

You'll be happy to know that the Act forbids the use of any funds for gambling establishments, aquariums, zoos, golf courses and swimming pools.

Buy America language: the House thought it appropriate to add a provision that any iron or steel purchased using funds from the stimulus be produced in the United States - there are some exceptions if using US iron or steel increases the price over 25% and others.  The provision makes its (ugly) appearance on the final version of the bill as well - there is language on the bill that safeguards our international treaties, so it should have no impact on that.

All grants calls and awards are to be published online at Recovery.gov - the site will contain information about how the funds will be allocated across the different states and localities.

Congress' intention is that most funds be disbursed under "fixed-price" contracts. For the un-initiated, a fixed-price contract calls for the contractor to be paid a pre-determined price for the goods and services provided - if in the delivery of the services the costs incurred are higher than initially estimated, the loss is the contractor's - likewise, if the costs are lower, the benefits go to the contractor as well.  In other contracting modalities such as "time & materials", and "cost plus", the risk for cost overruns is carried by the government (as are the benefits).

States will receive significant support : The final compromise provides states with $54 billion in discretionary spending geared in large part towards financing spending on education.  In addition, to these funds, Congress will support states by providing fiscal relief estimated by the CBO at over $94 billion - Medicaid support costs make up the bulk of that spending.