Stimulus Package
The Economic Stimulus Act of 2008 was an Act respectively passed by the United States House of Representatives and the Senate on January 29, 2008 and on February 7, 2008. President Bush signed the stimulus package bill into law on February 13, 2008 with the support of the minority of Republicans lawmakers, together with the majority of the Democratic. The Act was an impressive law that attempted to deal with the uncertain American economy during that year. The stimulus package was passed in order to provide Americans with a number of economic stimuli that are designed to improve their economic conditions, to ward off recession, as well as to improve the countrys economy. Moreover, the Act was made in response to the significant reduction of labor force by companies, the sky rocketing taxes being imposed to more than 90 percent of working families, and lack of realistic incentives provided to businesses in the country. Detractors, however, raised apprehensions regarding the soundness of the financial moves due to the possibility that they would only increase the national debt.
Objectives
The objectives of the stimulus package of 2008 were basically focused at putting the interest of the people first. Therefore, the law provided middle and low income tax payers of the United States with tax rebates, as well as several tax incentives to encourage business investment, and increased restrictions on mortgages that are qualified for procurement by government-subsidized endeavors. Accordingly, the Act presented a short-term increase from 417,000 to 625,500 in the size of mortgages that can be guaranteed and purchased by government-subsidized mortgages finance companies. This specific provision prevented the chances of failures of multitudes of bank across the United States as well as the accumulation of repossessed houses that were plummeting in a fragile housing market. The stimulus package has indeed become a blessing to institutions that were beaten by the sub-prime mortgage annihilation.
The downturn in housing and mortgage crisis has been the primary causes of the deterioration of the countrys economy. For that reason, the stimulus package additionally made home ownership more accessible to middle and lower class by raising the restrictions on Federal Housing Administration loans. The Act lowered the down-payment requirements of home-buyers when obtaining FHA loans, lower origination fees, as well as augmented the restriction on loans qualified to be FHA-insured. In addition, this particular provision of the Act provided assistance to lenders that granted loans to uncertain borrowers who have difficulties in arranging home financing due to the market collapse for sub-prime mortgages that were taking place in 2008.
Aside from providing stimulus rebates to individual taxpayers, the Act likewise provides incentives to businesses. The incentives provided to businesses were aimed at obtaining more long-term benefits to the country. Due to such incentives companies were encouraged to continue their business operations in the United States, thus keeping the funds in the country, created new jobs to the people, and preserved other jobs, instead of sending them overseas. In order to encourage businesses invest in new equipment and plants, the stimulus package allocated more than 50 billion to help cover the expenses. In addition, the Act increased the small business expensing restrictions beginning 2008 tax year and an extraordinary 50 percent reduction stipend for purchases made throughout 2008.
Of all the provisions of the Economic Stimulus Act, the section that provides rebates on tax has drawn much of the interest among the countrys tax payers as well as generated enormous debate. The stimulus package basically became an amendment in the tax code as it eliminated the 10 percent category from 10 percent to zero for the initial 6,000 of taxable income in 2008. The objectives of this provision are to refund 300 for anyone making at least 3,000 annually and with no tax liability, or doubled in case of couples filing jointly 600 for anyone earning less than 75,000 annually, but with tax liability, likewise doubled in case of couples filing jointly people earning over 75,000 but no more than 87,000 annually would receive rebates in varying amounts and people earning more than 87,000 annually would receive no refund (Internal Revenue Services, 2008). Moreover, any person eligible for a stimulus payment were allowed to receive an additional 300 for each of their qualified child.
Theories
In 2008, the United States House of representatives together with the Senate passed the stimulus package in order to provide the United States taxpayers refunds as well as investment incentives for businesses that amounted to approximately 150 billion, or equal to roughly one percent of the annual economic activity of country. The President and the Congressional representatives believe that the stimulus measure would help keep the United States economy from descending into recession. The government expected that taxpayers who will be benefited from the Act will head off and expend the money they received, thus boosting the countrys economy. Since it is a stimulus package, the government assumed that the money distributed will immediately go directly back into the cash register of companies all over the place. Accordingly, for businesses, homeowners, and taxpayers who were respectively seeking for an opportunity for rebates, incentives, and refinancing that has a better options and rate, the stimulus package have become a huge blessing on them.
Objectives
The objectives of the stimulus package of 2008 were basically focused at putting the interest of the people first. Therefore, the law provided middle and low income tax payers of the United States with tax rebates, as well as several tax incentives to encourage business investment, and increased restrictions on mortgages that are qualified for procurement by government-subsidized endeavors. Accordingly, the Act presented a short-term increase from 417,000 to 625,500 in the size of mortgages that can be guaranteed and purchased by government-subsidized mortgages finance companies. This specific provision prevented the chances of failures of multitudes of bank across the United States as well as the accumulation of repossessed houses that were plummeting in a fragile housing market. The stimulus package has indeed become a blessing to institutions that were beaten by the sub-prime mortgage annihilation.
The downturn in housing and mortgage crisis has been the primary causes of the deterioration of the countrys economy. For that reason, the stimulus package additionally made home ownership more accessible to middle and lower class by raising the restrictions on Federal Housing Administration loans. The Act lowered the down-payment requirements of home-buyers when obtaining FHA loans, lower origination fees, as well as augmented the restriction on loans qualified to be FHA-insured. In addition, this particular provision of the Act provided assistance to lenders that granted loans to uncertain borrowers who have difficulties in arranging home financing due to the market collapse for sub-prime mortgages that were taking place in 2008.
Aside from providing stimulus rebates to individual taxpayers, the Act likewise provides incentives to businesses. The incentives provided to businesses were aimed at obtaining more long-term benefits to the country. Due to such incentives companies were encouraged to continue their business operations in the United States, thus keeping the funds in the country, created new jobs to the people, and preserved other jobs, instead of sending them overseas. In order to encourage businesses invest in new equipment and plants, the stimulus package allocated more than 50 billion to help cover the expenses. In addition, the Act increased the small business expensing restrictions beginning 2008 tax year and an extraordinary 50 percent reduction stipend for purchases made throughout 2008.
Of all the provisions of the Economic Stimulus Act, the section that provides rebates on tax has drawn much of the interest among the countrys tax payers as well as generated enormous debate. The stimulus package basically became an amendment in the tax code as it eliminated the 10 percent category from 10 percent to zero for the initial 6,000 of taxable income in 2008. The objectives of this provision are to refund 300 for anyone making at least 3,000 annually and with no tax liability, or doubled in case of couples filing jointly 600 for anyone earning less than 75,000 annually, but with tax liability, likewise doubled in case of couples filing jointly people earning over 75,000 but no more than 87,000 annually would receive rebates in varying amounts and people earning more than 87,000 annually would receive no refund (Internal Revenue Services, 2008). Moreover, any person eligible for a stimulus payment were allowed to receive an additional 300 for each of their qualified child.
Theories
In 2008, the United States House of representatives together with the Senate passed the stimulus package in order to provide the United States taxpayers refunds as well as investment incentives for businesses that amounted to approximately 150 billion, or equal to roughly one percent of the annual economic activity of country. The President and the Congressional representatives believe that the stimulus measure would help keep the United States economy from descending into recession. The government expected that taxpayers who will be benefited from the Act will head off and expend the money they received, thus boosting the countrys economy. Since it is a stimulus package, the government assumed that the money distributed will immediately go directly back into the cash register of companies all over the place. Accordingly, for businesses, homeowners, and taxpayers who were respectively seeking for an opportunity for rebates, incentives, and refinancing that has a better options and rate, the stimulus package have become a huge blessing on them.