House Approves $146B Economic Stimulus Package

The U.S. Congress approved a USD146 billion aid package in a bid to lift the troubled U.S. economy due to the subprime mortgage crisis since last summer.

This is by far the largest cash injection by the U.S. government till date to prevent the economy from falling into a recession. In the last 2 months, Wall Street shares has taken a beating and the effects have been wide spread affecting global markets. Even the Chinese and Indian economies were not spared. on average, Chinese ‘A’ shares have fallen by 12% to 15% from the all time high registered in early November 2007.

Will the aid package be enough spur the weak economy? How will this directly affect votes in the ongoing U.S. Elections? As far as investors are concerned, the major indices have been given a boost since yesterday. It will probably take weeks before we can be certain on the results of the USD 146 billion aid package but any upward trend in share prices will calm some nerves for now. Directly affected by the stimulus package will be individuals and families hit hard by the subprime fallout with rebates ranging from USD600 to USD1,200.

Quoted from http://www.foxbusiness.com/markets/industries/government/article/house-approves-146b-economic-stimulus-package_456153_18.html:

House Approves $146B Economic Stimulus Package

Tuesday, Jan. 29 2008

House Approves $146B Economic Stimulus Package

Associated Press

WASHINGTON — The House, seizing a rare moment of bipartisanship to respond to the economy’s slump, overwhelmingly passed a $146 billion aid package Tuesday that would speed rebates of $600-$1,200 to most taxpayers.

The plan, approved by a yes-no margin after little debate, would send at least some rebate to anyone with at least $3,000 in income, with more going to families with children and less going to wealthier taxpayers.

It faced a murky future in the Senate, though, where Democrats and Republicans backed a larger package that adds billions of dollars for senior citizens and the unemployed, and shrinks the rebate to $500 for individuals and $1,000 for couples. That plan, written by Finance Committee Chairman Max Baucus, would deliver checks even to the richest taxpayers, who are disqualified under the House-passed measure.

Both versions would provide tax breaks to businesses to spur equipment and other purchases.

Baucus, D-Mont., planned a Wednesday vote in his committee, and Majority Leader Harry Reid has said he hopes to have it approved by week’s end. Congressional leaders are aiming to send the measure to President Bush by Feb. 15.

But the divergent plans — and bids by Senate Democrats and Republicans to swell the package with more add-ons — could drag out that schedule.

Sen. Mitch McConnell, R-Ky., the minority leader, said the Senate should simply pass the House measure, which would send it straight to Bush for his signature.

“This is not a time to get into some kind of testing of wills between the two congressional bodies. This is a time to show we can rise above partisanship, do something important, and do it quickly,” McConnell said.

The House plan brought together Democrats and Republicans, both of whom surrendered cherished proposals to reach a deal.