Will the nearly $1trillion Stimulus Bill Stimulate Recovery?

Forbes, a keeper in the next few weeks as the battles play out:

Safety-Net Spending

Cost: $164 billion
Stimulative? Yes

What is it? $17 billion to temporarily increase food stamp benefits, $23 billion for Health and Human Services programs, $13 billion for housing assistance, $43 billion for unemployment insurance, $40 billion for health insurance for unemployed workers, a $24 billion increase for the Earned Income Tax Credit, $4 billion for Department of Labor training programs.

Who benefits? The unemployed, low income workers and the businesses where they spend.

Does it stimulate? Absolutely. Many of the programs will be able to increase their level of spending quickly--much more quickly than it takes to finish building a highway--and the recipients of the money are likely pressed for cash and will quickly spend it. The CBO estimates that nearly all this money will be spent in 2009 and 2010.

Making-Work-Pay Tax Cut

Cost: $144 billion
Stimulative? Toss up

What is it? A tax cut of $500 per person per year for everyone earning up to $75,000, and a gradually smaller tax cut for those earning up to $100,000.

Who benefits? Everyone receiving the cut. Some of that money will be saved, but some of it will be spent on consumption, benefiting the businesses where that money is spent.

Does it stimulate? Maybe. Just $13 billion will make it to taxpayers in 2009 and $95 billion in 2010. If people feel confident and spend the money, it would have a big impact in 2010. If not, most might be hoarded. The administration intends eventually to make the cut permanent. (See "Here's $9.62. Go Save The Economy.")

Energy Efficiency Retrofitting and Environmental Spending

Cost: $90 billion
Stimulative? No

What is it? $14.5 billion for energy-efficiency programs, $3.5 billion for renovation and energy-efficiency improvements for department of defense, $10 billion for federal loan guarantees on renewable energy systems, $6.5 billion for electric power transmission systems, $4.5 billion for the nation's electricity grid, $8 billion for environmental remediation, $20 billion to extend renewable energy tax credits, $11 billion to promote energy efficiency in government buildings and fleets, $12 billion for clean water programs.

Who benefits? Construction workers and manufacturers of energy-efficient and clean technology.

Does it stimulate? Not really. While it would increase funding for energy efficiency more than seven times the current funding level for such programs, the Congressional Budget Office anticipates that less than half the money will be spent in the first two years.

State Stabilization Fund

Cost: $79 billion
Stimulative? Yes

What is it? A fund to provide grants to states to shore up their budgets. States will receive a separate $5.2 billion in grants for community development projects. A further $87 billion will be spent to increase the percentage of Medicaid paid by the federal government instead of the states.

Who benefits? State employees and businesses, depending on revenue from states that might otherwise be facing job losses.

Does it stimulate? Probably. JPMorgan Chase estimates that state and local support for the stimulus package will provide a $46 billion GDP boost in 2009 and $27 billion in 2010.

Education Spending

Cost: $79 billion
Stimulative? No

What is it? $21 billion for school renovations, $14 billion for Pell grants, $27 billion for education programs like special education, $13 billion for a nonrefundable higher education tax credit.

Who benefits? In addition to the schools, programs and students themselves, the renovation projects would employ large numbers of construction workers.

Does it stimulate? Not when it matters. Many construction projects will have to go through approval and bidding processes. The CBO estimates that most of the money would be spent within two and a half years.

AMT Fix

Cost: $70 billion
Stimulative? Somewhat

What is it? A temporary measure to fix the Alternative Minimum Tax. The AMT was originally designed to stop tax dodgers but increasingly applies to middle income families.

Who benefits? More than 20 million families would be hit by the AMT if not for the temporary patch. The AMT has been fixed one year at a time for years and was likely to find its way into legislation even if not included in the stimulus bill.

Does it stimulate? A bit. The fix prevents millions of families from being hit with an unexpected tax increase when filing their 2009 taxes in 2010.

Infrastructure Spending

Cost: $54 billion
Stimulative? Not really

What is it? $9 billion for expanding broadband Internet, $27 billion for highway construction, $18 billion for Department of Transportation programs.

Who benefits? Construction companies and workers and manufacturers of broadband technology.

Does it stimulate? Don't bet on it. Spending on highway projects is traditionally slow-moving, frequently taking six to eight years to spend according to the CBO, meaning that the stimulus and job creation from the programs could be years away. The National Telecommunications and Information Administration, which would administer the broadband program, has a current budget of $17 million. The CBO estimates it would take the NTIA seven years to spend that amount of money.

Business Tax Cuts

Cost: $32 billion
Stimulative? Very likely

What is it? A provision that would allow businesses to expense investments and to use losses in unprofitable years to obtain refunds for past taxes.

Who benefits? Businesses who paid a lot of taxes in the past but are now suffering heavy losses will get some of that tax money back.

Does it stimulate? Very likely. Businesses would see their tax bill shrink by $138 billion in 2009 and 2010 but increase in the future. Many businesses would be poised to take advantage of the tax break quickly and would have an immediate incentive to make new investments.

Health Information Technology

Cost: $18 billion
Stimulative? No

What is it? A system of incentives, through Medicare and Medicaid, to encourage health care providers to digitize medical records.

Who benefits? The firms creating the software benefit initially. The government is hopeful that digitized medical records will benefit everyone in the system by reducing inappropriate tests, unnecessary paperwork, administrative overhead and medical errors and ultimately drive down costs.

Does it stimulate? No. Though a campaign promise of President Obama's, the Congressional Budget Office estimates that virtually no spending from the program would occur in 2009 and 2010, and thus the benefits would be many years away and could not be considered stimulus spending.

Research Spending

Cost: $14 billion
Stimulative? Not really

What is it? $5 billion for carbon capture research, $3 billion for grants to improve the criminal justice system, $2 billion for science and technology research grants, $1 billion for the census, $1 billion for the National Oceanic and Atmospheric Administration, $2 billion for NASA

Who benefits? Researchers and universities, with the hope that unexpected breakthroughs could benefit nearly everyone.

Does it stimulate? Not really. The spending would employ or increase funding for researchers, and more than half the money could be spent in the first two years. This is a bet on breakthroughs, not a plan to get the economy moving tomorrow.

How much actually might do something?
Of CBO estimated $884 billion and $500 billion in interest, $275B or about 19% of the money spent might do some good.