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Saturday, February 14, 2009

American Recovery and Reinvestment Act of 2009

Updated 2/17/09

The $789-billion, 1100-page stimulus bill has benefits
for almost everyone

The Fed will buy mortgage-backed loans
for as long as it takes to keep interest rates low.

Housing is a top priority for all. Up to $100 billion
will be spent to help. Under the Treasury’s plan, delinquent
homeowners will be able to redo their mortgages to avoid
foreclosure. The stimulus tries to spur buying with more
tax credits. And the Fed will buy T-bonds as needed to
keep fixed rate mortgages around 5%.

A boost for home buyers...and the housing industry:
An $8000 tax credit for first-time home buyers who buy a
home between January 1st and November 30, 2009 will need to
be repaid if they sell the home within 3 years (the previous
credit needed to be paid back eventually).

The credit begins to phase out for couples who make more
than $150,000 income per year
, and for single filers making
more than $75,000 per year.

(More on home buyer benefits as details become available!)

Throwing billions at the problems means soaring deficits
and inflation later
But policymakers see those as the least of the evils they
face. And it will help efforts to keep deflation from getting
out of control. That would lead to a downward spiral that
could get vicious and certainly would result in a much longer,
deeper recession.

About 65% of the money will go to spending,including
general and specific aid to the states, energy investments,
health and infrastructure.
Much of the spending will help businesses

Infrastructure. States will get $29 billion to divvy
up for roads and bridges, $8.4 billion for mass transit,
$9.3 billion for rail and $6 billion in clean water projects.

How will Utah spend their State portion?

Utah, Nev., Wyo. and Idaho all get $200 million.
Widening roads is a priority for each: U.S. 6, I-15 &
I-70 plus Rte. 108 in the Ogden area, and fixing old
Bridges and Roads for Utah...

Tax cuts in the stimulus will help businesses and
individuals get a leg up
. Smaller firms with losses
get a big break
. They can carry back a 2008 tax loss
to offset income in the five prior tax years, instead
of two years, for a quick cash infusion. But this
relief is limited to firms with average gross receipts
of $15 million a year or less.

Workers will see more in their paychecks, thanks to
a payroll tax credit for 2009 and 2010: 6.2% of income
capped at $400 for singles and $800 for couples.
It will be phased out, however, starting at incomes
of $75,000 for single people and $150,000 for married

I will continue to update details of the final bill as
it is passed into law (Tuesday February 17, 2009 is the
anticipated signing of the bill into law by President Obama).