Feel the Benefit of the Stimulus Package

Where's $787 Billion Going

The American Recovery and Reinvestment Act of 2009, approved by Congress last week, will try to rescue the economy with an unprecedented $787 billion package of government spending and tax cuts.

Spending is expected to account for nearly three-fourths of the package; tax cuts will make up the rest. The bill is loaded with public-works projects; green initiatives (such as incentives for renewable energy and energy efficiency); and money for the social safety net, education and myriad federal and state programs.

If this jump-starts the stalled economy, then consumers and business stand to benefit regardless of how specifics of the plan -- a home buyer's credit, say -- directly affect them. The economic-stimulus bill also helps the unemployed through extended jobless benefits and subsidies on health-insurance premiums.

Follow the money:

TAX CREDIT

An income-tax credit of up to $400 ($800 for a couple) for 95% of workers is President Barack Obama's promised middle-class tax cut, somewhat scaled back. Individuals with incomes above $100,000 and couples with incomes above $200,000 won't get the tax credit.

Unlike the stimulus checks sent to taxpayers last year (up to $600 for an individual and $1,200 for a couple), the credit will show up this year in the form of lower payroll withholding -- meaning slightly bigger paychecks (the equivalent of about $8 a week). Economists think most workers will spend that money, whereas many consumers banked last year's checks (or used them to pay down debt).

Retirees and some others who don't work will get $250.

Winners: Retail, restaurants, movie rentals -- any seller of small-ticket goods or services.

The score: A small boost to this recession economy, sprinkling money far and wide in the next year.

HOME BUYERS

Congress passed a $7,500 tax credit for first-time home buyers last year, but it did little to revive the slumping housing market. The new bill increases the credit to $8,000 and eliminates a requirement that buyers repay the credit over time.

A bigger deal: Treasury Secretary Timothy Geithner committed $50 billion last week to help homeowners avoid foreclosure and renegotiate mortgages.

Winners: Homebuilders; Realtors; manufacturers and retailers of home products (a home purchase stimulates sales of carpeting, furniture and home-remodeling products and services); loan-service companies (government may pay fees to rework loans).

For more about the package click here