Philosophically opposed or not, the federal economic stimulus package started to kick in Wednesday, with Americans soon to feel its wash over the U.S. economy and down to them.
The most profound effect will be in almost everybody's paycheck, as the stimulus package's Making Work Pay tax credit took effect on Wednesday. The White House said the tax credit means that 2 million working families will collectively et $1.1 billion through lower withholding. The impact includes:
E For 2009 and 2010, the Making Work Pay tax credit provides a refundable tax credit of 6.2 percent of earned income up to $400 for working individuals and $800 for married taxpayers.
E Families should see at least a $65 dollar per month increase in their take home pay.
E The credit will phase out for taxpayers with adjusted gross income in excess of $150,000 for married couples filing jointly and $75,000 for other workers, and thus is fully phased out for taxpayers with modified adjusted gross income in excess of $190,000 for married workers and $95,000 for other workers.
A major portion of the federal package also includes infrastructure work which should provide construction jobs and boost vendors and suppliers. Gov. Tim Pawlenty on Wednesday signed legislation to accept $600 million in federal monies for roads, bridges and transit projects.
The funding will help locally, mostly with a $2.8 million project to straighten and flatten out U.S. Highway 2 just east of Wilton by removing the road span over now-abandoned railroad tracks. The state Department of Transportation estimates it will create nearly 56 jobs. Another lesser project is a signal replacement at Ridgeway Avenue. Paul Bunyan Transit will gain funding for infrastructure and buses.
Pawlenty also announced Wednesday that stimulus funding will go to nine rural Minnesota airports under the package's grants-in-aid provisions. MnDOT will get $20 million to $25 million for airport facility improvements and equipment. The governor's announcement will send $250,000 to Bemidji Regional Airport for its apron rehabilitation project.
Soon, we'll see the effect of stimulus finding throughout the economy. U.S. Education Secretary Arne Duncan on Wednesday released the first $44 billion from the package, will filter through to the nation's schools. Cities, counties and schools will be making their case for projects and their piece of the stimulus package.
How easily the money flows could be a problem There is a great rush for accountability and transparency, and rightfully so, but if rules and regulations are too restrictive, the economy won't be helped.
The biggest concern is getting the American public to regain confidence in the economic system. That means spending money and consuming. Whether the few bucks a week more in the paycheck, or added pay from new construction jobs, will do it will be the subject of economic textbooks and critiques for decades to come.
At any rate, it's a ship that's sailed.