Americans sat bewildered last Tuesday watching Timothy Geithner's remarks, a series of vagaries culminating in incomprehensible simplifications of the stimulus plan, including the "Bad Bank" and a "stress test" to analyze the balance sheets of banks in need of assistance. break Despite the off-putting vagueness, it soon became clear that the stimulus plan is a much more farsighted remedy for this economic crisis than Franklin Delano Roosevelt's New Deal was for the Great Depression. FDR focused on job creation and regulatory institutions to protect the average American from bankers that he deemed were "either incompetent or dishonest in the handling of people's funds." The stimulus plan, in comparison, intends to boost morale of average Americans while buying toxic assets—bonds or derivatives backed by dubiously valued assets from failing banks—and to create long-term initiatives intended to prepare the country to compete on the economic global stage more effectively in the future. Yet this plan's potential is irrelevant if the Obama administration cannot rally the confidence of the American people. The stimulus plan is intended to create or preserve between 800,000 and 3.5 million jobs and cut taxes to the tune of at least $280 billion for individuals and businesses, but it is the plan's long-term initiatives that could most benefit the U.S. by creating conditions that would lead to a vibrant economy and sustainable job creation for the future. These initiatives entail hefty government spending, including investments of $400 million for climate research by NASA, $30 billion to modernize electric grids and provide energy efficiency grants, expansion of Medicaid insurance programs, and even grants and loans for water infrastructure, flood prevention, and environmental clean up (a project whose absence and necessity were glaringly evident in the wake of Hurricane Katrina). While all of these investments are useful and arguably should already have been implemented, the success of the stimulus plan in the future largely depends on how it affects the confidence levels of consumers and the American people now. Programs intended to fight unemployment involve a lag time, and even Obama's administration admits that unemployment levels will rise to eight percent this year. What can be done to raise confidence and comfort consumers? Tax cuts and foreclosure prevention are the most visible actions the government can take to show the American people the tangible effects of this new legislation. A $6.6 billion tax credit for first time home-owners will be raised by $1000 and will not need to be repaid. A $116.2 billion tax credit to workers earning less than $75,000 will result in a credit of up to $400 while married couples making less than $150,000 may receive up to $800. $69.8 billion will be provided to middle-income taxpayers, resulting in an exemption from the alternative minimum tax as well as $5.1 billion providing businesses with a means of deducting costs of investments and equipment from taxable income. In terms of housing relief programs, Obama pledged to use between $50 and $100 billion to combat ongoing foreclosures, a plan which he will unveil on Feb. 18. Citigroup, JPMorgan Chase, Morgan Stanley, Bank of America and Wells Fargo have agreed to a moratorium on foreclosures for three weeks to give the administration time to craft a coherent policy on dealing with these delinquent mortgages. Larry Summers has stated that the administration is looking into reducing monthly payments rather than changing the value of the principle. Yet none of these stimulus programs seems to affect us as college students directly. The only programs truly directed toward us are those designed to tackle the inordinately high costs of a college education. Sadly, many students on this campus have found themselves in a bind when attempting to apply for student loans for next year, as banks have become increasingly conservative in their lending. The programs that will be implemented are a $200 million investment in grants for colleges' work-study programs, a $14 billion Education Tax Credit, as well as a $17.2 billion increase in student aid, which would raise the maximum Pell Grant by nearly $500, to $5350 in 2009. While these may be adequate to fund some college educations, they will have a minimal effect on students like we in Morningside who are attempting to pay off a tuition that exceeds $35,000. As our generation will be the immediate future of the workforce, the government should keep its eye just as focused on our sentiment and trust levels as towards government policy. Let's hope that these meager increases by way of tax refunds and access to loans and grants are strong enough motivators to improve consumer sentiment. If so, there is hope that this comprehensive plan could have the desired effect of revitalizing our economy. If not, it could sink us into an even more dire economic situation in which we have $1 trillion in debt and less confidence in our policy-makers than ever. The author is a Barnard College junior. She is the Director of Foreign Policy for the Roosevelt Institution.
Columbia Spectator Staff