What does it mean for you?
Published 12:54 am Sunday, February 15, 2009
Some say it will create jobs. Others, that it will stimulate the housing market and bring money for new infrastructure. Still others are banking on increases for deficient education budgets.
But now that a $797 billion economic stimulus bill is one step away from becoming the biggest piece of legislation in the nation’s history, what does it really mean?
Director of Troy University’s Center for International Business and Economic Development Judson Edwards has given his take.
From tax credits to spending, Edwards said the bill is something that is hard to digest, even for an economist. But, one thing is for certain — whether a local business owner, single parent or a schoolteacher, there is something labeled in the bill for everyone. Just because it’s in there though, Edwards said he isn’t quite convinced the bill is packed with all the right things.
“There are several points I’m not comfortable with in it,” Edwards said. “They’re keying in on things I’m just not sure will stimulate the economy.”
Edwards said a plan calling for job creation, may in fact, not be investing in the areas he thinks would have a greater impact — industries.
“The way to stimulate is to go to these industries that have high economic multipliers, meaning they create more jobs down the line,” Edwards said.
And in a globally-interdependent economy, Edwards said he isn’t sure a stimulus package would generate funding that stays in America.
“Today, we just don’t make that much anymore,” Edwards said. “Parts could be coming from somewhere else.”
But, Edwards said the bill isn’t all unnecessary spending, and Pike County could see results in several ways.
A bill with $116 billion for tax credits, will give $400 per-worker and an $800 per-couple tax break on 2009-2010 federal income taxes.
These, Edwards said could bring relief faster than any other way. “I’m all in favor of tax cuts,” Edwards said. “That’s the fastest way to stimulate an economy.”
Perhaps one of Pike County’s biggests needs is infrastructure.
With $46 billion designated solely for that in the stimulus package, some could trickle down to Pike County.
And if it does, municipalities and the county commission have done their homework by submitting a list of shovel-ready projects in hopes of getting their share.
Whether the money comes, is something Edwards said he can’t address, but if it does, the county could reap benefits.
Construction projects, he said, are one of the easiest ways to boost the local economy, since all labor, materials and the sales taxes would be generated at home.
“If we built a new building on Troy University’s campus, we would have local construction, local salaries, local goods and of course local sales tax,” Edwards said.
It’s still uncertain how much Alabama’s state education budget could reap from the $44.5 billion allotted from the stimulus.
But, in a time of one of the worst budget deficits in state history, and a gloomy outlook just around the corner, any little bit could help.
“There may be money to help us keep teachers employed,” Edwards said.
The only problem, he said, is this stimulus may just serve as a prop until the economy improves.
And if conditions don’t improve, Pike County will be right back in the same sinking boat in a matter of time.
Credits for business owners could add relief to small businesses, and help them purchase new equipment, Edwards said.
“Bonus depreciation for businesses could be beneficial,” Edwards said. “It’s proved to be a big help for doing business.”
And with the way things are now, some local business owners said they are hoping this bill will do some good locally.
“In the last two and a half years, business has declined and customer confidence is poor,” said Steve Hemendinger, general manager for Hendricks Hardware. “With economic conditions as they are today, we can certainly use any kind of stimulus that will help all of us.”
But Scherr Qualls, owner of Douglas Brothers Jewelry, said he isn’t banking too much on relief yet.
“We could always use more business, but I don’t really think anything in that package would be a direct help here,” Qualls said.
The waiting game
Whether the stimulus will bring Pike County relief is something that’s likely at least to some extent, Edwards said.
Now, it’s just a matter of when.
“That’s another mystery. How fast can they get this thing moving?” Edwards said.
Tax cuts, he said, would take effect immediately. Spending in the bill, is another issue.
“I’m not sure we’ll see any benefit in 2009,” Edwards said. “Maybe we will in the first quarter of 2010.”
U.S. Congressman Bobby Bright (D-Montgomery), who represents Pike County in congress, said even though he did not vote for the bill, he will do all in his power to make sure his constituents see results.
“Though I did not support this bill, it is still my responsibility to ensure that Alabama gets its fair share of funding and projects and that taxpayer money is used for its intended purposes,” Bright said.