The economic recession prompted the Obama government to device a stimulus package that will cushion the economic spiral. After the approval of the U.S. Congress, the government had allocated USD 787 billion for government expenditure. This expense (including tax credits, grants, contracts, and loans) was widely seen as the national debt relief stimulus plan. The government planned to spend the sum of USD 787 billion over a period of ten years to stabilize the ailing economy. A major chunk of the funds were allocated to be spent in the first three years. Tax benefits to organizations were aimed at saving them from bankruptcy, and in the process, helping the general population retain jobs.
- According to Recovery.gov (until they displayed the latest data), over USD 220 billion in the infrastructure had been put up to create new jobs, help consumer spending, education, and health care.
- Over USD 285 billion dollars were offered for tax benefits.
- Over USD 275 billion was allotted for grants, loans, and federal contracts.
- As mentioned before, the plan was carved out for a decade. Reliable statistics assert that USD 720 billion was set for the first three fiscal years.
- As of 2009, the plan is believed to have saved more than 600,000 jobs.
- The Congressional Budget Office predicted an economic contraction of 3% in 2009. The economy contracted by 2.8% instead, and expanded by 2.5% by the next year.
- Apparently, the plan worked out brilliantly to begin with, however, the budget at the end of the fiscal year 2012 indicated an additional funding of more than USD 50 billion.
- Reportedly, the plan could not reduce unemployment up to the expected level, leading to addition of debt.
- The tax credit program introduced by the administration was aimed at enabling the citizens to take home more money to pay off their debts and increase spending.
- After the government proposed the stimulus plan, the U.S. Congress signed the American Recovery and Reinvestment Act of 2009 (ARRA).
- The administration also realized that economic conditions caused some credit card companies to be ambiguous in their transactions. This led to a rising number of people with credit card debt.
- Realizing the need for greater transparency, the U.S. Congress passed the Credit Card Accountability Responsibility and Disclosure Act of 2009. This act popularly came to be known as the Credit Card Reform Act of 2009.
- These two acts together were widely regarded as the national debt relief initiative undertaken by the Obama government.
The American Recovery and Reinvestment Act (ARRA)
- Many tax credits promised under the ARRA were aimed at helping people save money to pay off their debts. For example, people who purchased a car in the year 2009 were allowed to deduct local and state sales tax along with any fees, which they may have paid in the states with no sales tax.
- The tax deduction was limited to a purchase of up to USD 49,500.
- The ARRA also made changes in the federal income tax withholding tables, allowing individuals to take home more salary.
- The work pay tax credit was up to USD 4,000 for individuals and USD 8,000 for married couples. It was also meant to also benefit self-employed individuals, although it is not applicable for retirees, unless they have earned income.
The Credit Card Accountability Responsibility and Disclosure Act
- This Act was included under the national debt relief program, because it had put curbs on the interest rates charged by credit card companies.
- It also mandated the card companies to notify its customers 45 days in advance about any changes in the interest rates.
- The companies were also supposed to mail the credit statements to the customers 21 days prior to the payment due date. Before this Act, the time frame was 14 days.
- The government also made it mandatory for the card companies to have their contracts online for government scrutiny. The Act also stipulates the font size used in credit card contracts.
Government Grants for Individuals
- There has been much hype about free government money for individuals to pay off debt. This, however, isn't true.
- The government does not pay off individual debt, and there is no stimulus plan for settlement of credit card debts.
- The government, however, does give individual grants to assist people for continuing education, home improvements, and health care.
- There are several government grants, like the Pell grant, SMART grant, etc., which give scholarships to deserving students from low income families.
- The Housing and Urban Development (HUD) department also gives home improvement grants to low income families for removing health hazards from their homes and to improve living conditions.
The government funding set aside by the US government to fuel the economy is popularly known as the national debt relief stimulus plan. The government reasoning behind the stimulus package is to increase consumer spending and cushion the economy by injecting government money in the markets.