Congress ready to pass Economic Recovery package; Includes help for low-income Minnesotans

**Quick update: The Center on Budget and Policy Priorities has just released new information on how Minnesota would benefit from the Economic Recovery package. Our state would receive an estimated $668 million from the education block grant, $149 million from the flexible block grant for states, and $2 billion from Medicaid (FMAP). Follow the links for more detail, particularly on the FMAP issue….and more later on how these funds can be used.**

As of Friday afternoon, the House has passed the final version of the Economic Recovery and Reinvestment Act by a vote of 246 to 183. The Senate plans to work through the weekend with a final vote expected Saturday or Sunday. President Obama hopes to sign the bill into law on Monday, President’s Day.

The $787 billion package includes a mix of direct aid to low-income individuals and families, fiscal aid to states, infrastructure spending, and tax credits aimed at helping low-income families. The final price tag of $787 billion is actually less than the House-passed bill ($819 billion) and the Senate-passed bill ($838 billion) as a result of negotiations to win the support of three moderate Republican senators (Sens. Susan Collins, Olympia Snowe and Arlen Specter) who are needed to assure passage of the bill.

Some key features of the package that will provide much-needed help to low-income Minnesota families include:

*  More than $40 billion to provide extended Unemployment Insurance benefits through the end of 2009, including an increase of $25 per-week in benefits. Additionally, the bill temporarily suspends the taxation of the first $2,400 in unemployment benefits.

$20 billion to increase Food Stamp benefits by 14 percent.

*  $14 billion to provide one-time payments of $250 to Social Security recipients, people receiving Supplemental Security Income (SSI) and veterans receiving disability benefits.

*  Close to $3 billion in resources for Temporary Assistance for Needy Families, including extending supplemental grants and establishing a contingency fund.

* $2 billion to provide child care for an additional 300,000 children in low-income families.

Aid to states includes:

$87 billion in increased federal matching funds to states to pay for Medicaid.

$45 billion for “fiscal stabilization” to help states build and repair schools and improve higher education facilities.

$9 billion in general fiscal aid to help states offset budget cuts for high priority state government and services.

Several tax provisions in the package are aimed at helping low-income families. These include:

$116 billion for a new “Make Work Pay” tax credit of $400 for individuals or $800 for married couples.

*  The earnings threshold for the Child Tax Credit is temporarily lowered to $3,000 to enable more families to qualify for the $1,000 per-child tax credit that helps families defray the cost of raising children (at a cost of nearly $15 billion).

*  The Earned Income Tax Credit is temporarily increased to 45% of the family’s first $12,570 of earned income for working families with three or more children (at a cost of nearly $5 billion).

For further details, see the summaries of the bill provided by the Senate Finance Committee and the House Appropriations Committee.

Stay tuned for further analysis, including how much Minnesota can expect to receive from the package.

-Steve Francisco

About Steve Francisco

Steve Francisco is the former federal policy analyst for the Minnesota Budget Project.
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One Response to Congress ready to pass Economic Recovery package; Includes help for low-income Minnesotans

  1. Jim Esper says:

    When does the next phase of unemployment begin. My unemployment ends April 18, 2009.

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