The Advantages and Disadvantages of the Stimulus Package Competition will be fierce for a piece of economic stimulus package pie. After all, this bail out is directly the result of a credit system in crisis from overextension of subprime lending. Too many American families are facing mounting piles of debt, job loss, and possibly the foreclosure of their home and business. Surveys of taxpayers show the expected uses of the tax rebate to be paying a bill/debt, beefing up a meager or depleted savings account, and spending it on a large item purchase. The U. S. ederal government is issuing a tax rebate for most middle and low income Americans. Married couples receive the most at $1,200 dollars with a $300 dollar addendum per child. Individual tax filers receive $600 dollars and even those without a tax burden due to lack of income will receive up to $300 dollars in relief. It sums up to a considerable amount of disposable income available to raise the falling economy. The entire goal of the economic stimulus package is to encourage Americans to spend more money in small businesses. The majority of wholesale retailers are small businesses, privately owned with less than 20 employees.

While this plan proves to be more advantages it still has its disadvantages for some Americans. President Obama has signed the $787 billion stimulus package into law with approximately 35% going towards tax cuts and the rest going towards stimulus spending. Just about everyone stands to benefit from the stimulus in some fashion in the short-term, but to a few demographics the opportunity to reap more gains than others are dim. Below I have listed a bulleted list of three groups of Americans who stand with an advantage or disadvantage from the current stimulus package. . Homeowners – Homeowners with a mortgage financed by either Fannie Mae or Freddie Mac are in luck because now, they can have their home loan modified into a, Government backed, 4% fixed rate mortgage. This is possible thanks to President Obama’s $75 billion “Making Home Affordable” plan, and here is how you can use it to your advantage. 2. Wage Earners & the Self-Employed – Wage earners and the self-employed are eligible for up to $400 a year for single taxpayers and up to $800 for couples filing jointly in both 2009 and 2010.

If you are single, the credit starts to phase out at an adjusted gross income of $75,000. If you are part of a couple filing jointly, your phase out would begin at $150,000 of adjusted gross income. You are probably wondering when the check will arrive. It won’t. The IRS will begin reducing withholding taxes automatically at the clip of about $30-$40 a month. If you are self-employed, you can claim your credit when you file your return for 2009. 3. The Unemployed – Have you been laid off recently?

Take some solace in knowing that the first $2,400 in unemployment benefits received can now be excluded income. Additionally, you may also be eligible for a 65% subsidy for up to 9 months if you stay on your former employer’s health insurance policy. You will also start to receive a $25 weekly increase in your benefit check. If you’ve been worried that your 26 weeks of unemployment benefits were almost up, you may now benefit from up to an additional 33 weeks through the end of the year. Your local unemployment office can provide further clarification. Advantages Benefits for Homeowners

If you are a homeowner who have missed or been late on a few monthly mortgage payments, you can apply for, and most likely be approved, for a home loan modification. This will allow you to get a 4% fixed Government rate which will save the average homeowner hundreds per month just in interest payment savings. The plan only covers homes in which one family lives in. The housing bailout is not for homeowners with more than one family living in them. A homeowner can now, be approved for a refinance or modification even if they happen to owe more than the market value of their home.

Now, thanks to this stimulus housing bailout refinance and modification plan from Obama, a homeowner will be allowed to refinance even if they owe up to 5% more than their homes worth on their home loan. Best of all, all mortgages and homeowners who are financed, backed, or insured by Freddie Mac or Fannie Mae will automatically be eligible for a home loan modification using the guidelines of this Government housing bailout plan. Basically, now, a home loan modification or refinance is easier than ever for a homeowner to be approved for while at the same time more beneficial.

Small Businesses Obama’s stimulus package, also known as The American Recovery and Reinvestment Act of 2009, could be the solution to small businesses in the current economic situation. Dedicated to scientific research, energy programs, school districts, contractors and Medicaid in conjunction with creating millions of new jobs, the $787 billion economic recovery package is a major topic on NEWS across the country. Who is going to be eligible for the money, how does one go about bidding for it and how much would one receive are all important questions being asked by business owners.

Good news – the federal assistance is for everyone, especially business owners facing significant challenges. This is even a great opportunity for small companies to step up and compete for business with larger corporations. With the plan in place, smaller companies will have an opportunity to bid competitively where previously their capabilities may have restricted them. One can learn how to take advantage of the stimulus package via the following seven benefits offered to small businesses. SBA Guaranteed Loans with Obama’s stimulus package on the horizon, small businesses around the country can now rest assured knowing that the Small Business Administration (SBA) will guarantee 100% of loans up to $35,000 without requiring payment for one year. With the $426,000,000 authorized to the SBA to loan out to small businesses – the stimulus package could definitely be that saving grace for you and your company. • Good-Bye to High Interest Rates For small businesses who currently have a loan that is locked in at a high interest rate, the stimulus package is of great benefit to you.

The SBA will be authorized to refinance small business loans as long as they were issued before the stimulus package was passed and are less than $10,000,000. • Ability to Increase Investments Up from 300% of a company’s private capital or $15 million (whichever is less), to 300% of a company’s private capital or $150 million as the maximum amount that a small business can invest; the stimulus package allows companies the ability to invest more in their company’s future. By increasing the cap at which a company can invest, businesses can spend more in business development and securing a position in the marketplace.

Whether you increase professional development, heavy-up marketing efforts or reallocate funds in struggling departments, the stimulus package can help. • Procurement Opportunities With many large companies looking to also cut costs right now, outsourcing work or bidding for services are becoming popular. Many procurement offices are offering up more Request for Proposal’s or RFP’s for companies to bid on along with adding a certain percentage required to outsource to minority companies. With these opportunities opening up, small businesses and minority business enterprises will be able to greatly benefit from the stimulus package. Vital Tax Breaks With this recovery package, companies will be able to immediately write off 50% of the cost (up to $250,000) of new business equipment this year. Small businesses can also make a win out of loss with this package. Any business with less than $15 million annual revenue can now carry back net operating losses for five years instead of the previous two. This means that a business who is currently losing money can apply these loses to a previous year where the business made out well and then claim a refund on those taxes paid during that specific year. Internet Improvement Grants With the passing of Obama’s stimulus plan comes many different types of grants for small businesses. One of the more important is the grant to improve broadband access or online abilities. The world is becoming digital and this package recognizes that fact and sets out to aid in whatever way it can. • Construction Contractors Lucky Day From transportation projects to road construction to housing development; this is the time for all contractors to up their marketing to the government sector.

With informative brochures, innovatively designed pocket folders and updated capability statements, many small construction companies have the ability to shine with the government through this new stimulus package. However you choose to utilize the stimulus package passed by Obama this year, there is a solution for you out there Disadvantages The most obvious explanation is the $36 billion in increased unemployment insurance benefits. Larger benefits at least for this year will encourage some people, who may be unhappy with their jobs, to be unemployed while they look for something better.

Others will be a little more reluctant to take a new job when they are offered it. Unlike the rest of the “stimulus” package that is over two years, since the increased benefits are only planned for this year, the higher payments will increase unemployment this year and then start declining soon after the extension ends. Yet, the “stimulus” package will do something else that will increase unemployment at least as much. Most of the new jobs will be for people who are currently employed. By moving money from places where it is currently being spent to places where the government wants it spent, you move the jobs also.

But it takes time for people to move between jobs. That is called unemployment. The jobs that the government “creates” may be in different industries and they may be in different places. You increase subsidies even more for alternative energy, and of course those companies will expand, but the subsidies also mean that less will be spent on less politically correct energy sources. You might create jobs in California, but you will reduce the number of jobs in coal mines in Pennsylvania, West Virginia and Ohio, or oil fields in Oklahoma and Texas. Where will those people who lose their jobs go?

They are not going to instantly pack up their cars and move to California. They may not even have the right sets of skills for the new government-created jobs. Wherever it is these displace workers end up, it will take some time, and during that time those workers will be unemployed. Most likely the jobs in the alternative energy industry will hire many employees away from industries that have nothing to do with coal or oil. The movement of those workers, as well as the impacts that the changes have on related industries, will temporarily cause some increase in unemployment.

Even if you know that you want to get a job in the alternative energy industry, which job do you accept? It takes time to find the job that fits your interests. You may quit your current job to have the time to search full time for the new one. All those changes mean more unemployment. Even just the threats of the stimulus plan being passed cause companies to change investments today, and that creates more unemployment now. References Unknown. (March 19, 2008). Getting a Piece of the Economic Stimulus Package. Ecommerce, from http://www. articlesbase. om/ecommerce-articles/getting-a-piece-of-the-economic-stimulus-package-364189. html Petrone, M. (June 15, 2009) Obama’s Stimulus and the Fannie Mae and Freddie Mac Mortgage Modification Options, Ezine Articles, from http://ezinearticles. com/? Obamas-Stimulus-and-the-Fannie-Mae-and-Freddie-Mac-Mortgage-Modification- Miller, GE. (February 17, 2009). How Much Will You Benefit From the Stimulus Package? Mint. com. , http://www. mint. com/blog/finance-core/how-much-will-you-benefit-from-the-stimulus-package/ Lott, Jr. J. R. (February 3, 2009).

Obama’s Stimulus Package Will Increase Unemployment. FoxNews. com, from http://www. foxnews. com/story/0,2933,487425,00. html Lowen, L. (March 25, 2009). Jobless Benefits for Women in the Obama Stimulus Package. Linda’s Women’s Issues Blog, from http://womensissues. about. com/b/2009/03/25/jobless-benefits-for-women-in-the-obama-stimulus-package. htm Eyenga, V. (March 11, 2009). Stimulate Your Small Business With Obama’s Stimulus Package. Ezine Articles, from http://ezinearticles. com/? Stimulate-Your-Small-Business-With-Obamas-Stimulus-Package=2088808