Will You Feel the Benefit of the Stimulus Package? Find Out Here

Where That $787 Billion Is Going -- and Who Stands to Gain

By Published on .

LOS ANGELES (AdAge.com) -- Pass the bucks.

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:

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.

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).

The score: The tax credit is far less than what builders and real-estate interests had hoped for. No quick turnaround for housing given the scale of the recession and housing downturn.

Buyers of new domestic and foreign cars and trucks will get a tax deduction on state and local sales taxes -- a big deduction considering sales tax approaches 10% in some areas.

Winners: Auto marketers and dealers.

The score: A small boost. The Tax Policy Center said: "Any increase in demand is highly uncertain ... given the precarious state of the economy and many households' finances."

The bill also expands credits for plug-in hybrid vehicles, an emerging market. Buyers will get a tax credit up to $7,500 for a plug-in electric car and a 10% credit (up to $2,500) for two- and three-wheel vehicles such as electric scooters.

Winners: General Motors Corp. and its Chevy Volt (due in late 2010); Zap, a California-based maker of electric vehicles; Vectrix Corp., a Rhode Island-based maker of electric scooters.

The score: A win for the green team, but plug-ins are a pricey play; Volt is expected to cost at least $40,000 (before incentives).

The bill includes $7.2 billion to expand broadband, with an emphasis on "unserved" and "underserved" communities such as rural areas. Within a year, the Federal Communications Commission must produce a "national broadband plan" including "a plan for use of broadband infrastructure and services in advancing consumer welfare, civic participation, public safety and homeland security, community development, health-care delivery, energy independence and efficiency, education, worker training, private-sector investment, entrepreneurial activity, job creation and economic growth, and other national purposes."

Winners: Telecom companies, media companies, others developing broadband-based content and services.

The score: A boost to anyone wanting to deliver high-bandwidth content, such as video, to households far and wide. Workers in rural areas will find it easier to get on the net.

The bill allows college students to use money from 529 college-savings plans to pay for computers, software and internet access.

Winners: PC marketers such as Apple, Dell and Hewlett-Packard

The score: No videogames; money can't pay for "sports, games or hobbies" software "unless the software is predominantly educational in nature."

The bill includes $300 million for rebates on Energy Star appliances. States will administer the program. About 15 states already offer appliance rebates; this will expand that effort.

Winners: Appliance marketers such as Whirlpool Corp. and General Electric Co.; retailers such as Home Depot and Sears.

The score: Consumer rebates will offset the cost difference between Energy Star and non-Energy Star appliances; consumers will save money with lower energy bills.

Congress allocated $650 million to pay for more coupons for digital-to-analog TV converter boxes and related educational/outreach efforts.

Winners: Michley Electronics' Tivax, LG Electronics' Zenith and other marketers of converter boxes; Amazon, RadioShack and other retailers.

The score: Government money had run out for $40 converter-box rebate coupons, so this will get the coupons flowing again. Mr. Obama, meanwhile, signed legislation putting off the nation's digital TV switchover until June 12.

The Census Bureau won $1 billion in additional money for the 2010 Census, some of which is meant to "increase targeted media purchases." Allocation includes "up to $250 million" for "partnership and outreach efforts to minority communities and hard-to-reach populations." That could mean more money for minority agencies and media.

Winners: Lead agency DraftFCB and media shop Initiative, both part of Interpublic Group; multicultural subcontractors including DraftFCB, GlobalHue, A to Sí, IW Group, G&G, Allied Media, Weber Shandwick, Jack Morton, Booz Allen Hamilton, Marcom Group and Zona Design.

The score: More money for promotion; potentially a more accurate census.

In this article:
Most Popular