Economic stimulus for everyone else: Washington considers $84 billion plan

If you're one of the 0.057 percent of Americans -- roughly 175,000 out of 305 million -- who are in line for $140 billion in Wall Street bonuses this year, you may be wondering why the government is spending $787 billion of your hard-earned tax dollars for "economic stimulus." After all, your employers got their $23.7 trillion bailout for causing the financial crisis and everything is hunky-dory now. Your bosses spent $5 billion for lobbying in Washington over the last decade and got an ample return on that investment, so why not just pull up the stairs and take off?

But if you're among the 15.1 million unemployed or part of the other 99.943 percent of America who are not doing so well these days, you might feel that the government is not doing enough for you. While the administration claims that its stimulus plan has saved or created a million jobs so far, that is nowhere near enough. But more help from Washington is coming: Fortune reports that another $84 billion in government spending and tax breaks is headed your way.

That package is designed to be small enough to be politically palatable among the crowd now clamoring for a balanced budget. And the $84 billion will be divided among five programs, which include the following (ranked by their estimated cost):

Job credits creation: $27 billion. As I posted, this program would give employers a tax break for creating new jobs. It would amount to 15 percent of new wage costs in 2010 and 10 percent in 2011 and could create 5.1 million jobs.

COBRA premium subsidy extension: $25 billion. This would extend a government program that pays for 65 percent of the cost of the premium for COBRA -- a program that allows terminated workers to stay on their former employer's health insurance plan -- for up to nine months for workers laid off between Sept. 1, 2008, and Dec. 31, 2009.

Home buyer tax credit expansion: $16.7 billion. This would extend beyond November a temporary government program that offers people making less than $75,000 a first-time home buyer tax credit. So far, 1.4 million tax filers have taken advantage of the program, and 15 percent of them bought their homes specifically because of the $8,000 tax break.

Emergency payments to seniors: $13 billion.
This would pay seniors, veterans and the disabled $250 each next year to make up for the lack of a Cost of Living Adjustment in their social security checks due to an absence of inflation.

Unemployment benefits extension: $2.4 billion. This would extend unemployment benefits for 1.3 million jobless workers who will have run out of unemployment benefits by the end of 2009 -- possibly by 14 weeks.

I am not sure whether Berkeley economist Brad DeLong is right that this kind of government spending has a multiplier effect of 1.5 -- creating $1.50 in extra economic activity for every $1 spent -- but I definitely think more needs to be done for the 99.943 percent of America that is not Wall Street.
And at a cost that's a mere 0.4 percent of Wall Street's $23.7 trillion bailout -- it's a small price to pay.

Peter Cohan is a
management consultant, Babson professor and author of eight books including, You Can't Order Change. Follow him on Twitter.
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