By Rep. Bill Pascrell
It should come as no surprise that seven years of misguided economic policies have caused the mighty American economy to become unsound and unsteady. Tax cuts targeted to the wealthiest few; carefree deficit spending and reckless industrial deregulation have all created an inviting climate for a damaging economic storm to come thundering down.
While middle and low income working families have been struck the hardest, the national economy has begun to feel acute symptoms of a looming recession. A sinking feeling of anxiety has gripped our economic engines. From Main Street to Wall Street, a clear call has been sounded for the federal government to step in to deliver immediate relief.
I am pleased to inform you that after years of wrangling over fundamentally flawed tax giveaways to special interests and the wealthiest few, a strong package of economic relief for working families is on the way. Last week, President Bush endorsed and signed a bipartisan $168 billion congressional agreement designed to stimulate the economy with a quick infusion of cash for middle and low-income families, capital for small business investment, and new jobs for the unemployed and underemployed.
The economic stimulus package begins with a $106 billion targeted rebate check program that will serve more than 130 million moderate and low income families nationally, 20 million additional seniors who rely on Social Security payments, and 250,000 disabled veterans. In New Jersey, there will be approximately 3.8 million residents who receive rebate checks averaging $842. That's $3.2 billion that will hopefully be pumped back into our state's economy.
Specifically, beginning in May of this year, individuals without children who earned less than $75,000 in 2007 will receive a rebate check of up to$600. Married couples without children that earn less than $150,000 will receive a check of up to $1,200. A $300 child tax credit will be added for each child under the age of 18.
Another 35 million families who have previously been shut out of any federal tax relief in recent years will also benefit and play a key role in picking up the recent economic downturn. Those who have worked enough to earn $3,000 but are too poor to pay federal income taxes will be on the receiving end of $32 billion in rebates. These individuals will receive a check of up to $300. Married couples who meet the criteria will receive up to $600 plus a tax credit of $300 per child.
Leading economist Mark Zandi of Moody's economy.com has attested that this shift in tax policy toward investment in low-income workers will increase the effectiveness of this economic rescue package by 24 percent over a plan that would have left out low-income families.
As the housing crunch continues to strain the economy, millions of families struggling to avoid foreclosure will find relief in a provision that increases loans from Fannie Mae and Freddie Mac. Loan limits of $417,000 will be raised to $729,750 retroactively and into the future for loans made between July 31, 2007 and Dec. 1 of 2008.
The bipartisan stimulus plan also includes a $44 billion investment in small businesses that will increase the ceiling for small business capital write-offs from $125,000 to $250,000 for the purchase of new equipment of up to $800,000. In addition, businesses will be allowed to write off an additional 50 percent of investments purchased in 2008 through bonus depreciation provisions.
While President Bush continues to propose giving $1.1 trillion in tax benefits to people who make $450,000 and above -- something that Democrats will not agree to -- I am heartened that by the hard work of many Democrats and Republicans, rebate checks will soon find their way into the hands of the families most in need; families that history tells us have the consumption power to quickly jumpstart the economy. Small business owners will begin investing in capital to expand their production and hire new workers.
Though it is unfortunate that is has taken the threat of a full fledged recession for this administration to finally embrace the economic potential of working class families, Congress has renewed an important commitment to America's workers. I am proud that this Congress worked along bipartisan lines and with the administration to continue building a strong record of responsible governance.
Our work is far from done, but I am confident this initial investment will return America back towards the path of economic expansion.
Rep. Bill Pascrell Jr., D-Paterson, represents the 8th Congressional District.