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Stimulus Plan 101

With the passage of the American Recovery and Reinvestment Plan, the BBC and Star Tribune broke down its details and truths on Saturday.

The $787 billion Stimulus Plan passed in Congress Friday, and will be signed into law by President Barack Obama next week, where the Star Tribune reports the stimulus will go to "paychecks to pavement, health insurance to schools."

The BBC reports that the plan is made of tax cuts, infrastructure investments, and aid to states dealing with their own budget deficits. Around one-third will go to tax cuts, and the infrastructure projects will include repairing roads, bridges and classrooms, and improving home insulation.

The Star Tribune gave details on the tax cuts, including tax breaks for "families that send a child to college, purchase a new car, buy a first home or make the ones they own more energy efficient." They also said the plan allots $87 billion for states to administer Medicaid, $90 billion for infrastructure projects, and $42 billion for energy-related investments.

"The stimulus package is likely to reduce the severity of the recession, although not eliminate its impact entirely" according to the independent Congressional Budget Office reported the BBC, but that much will depend on the reactions of citizens and government officials. Tax cuts will need to be spent rather than saved to be beneficial, while infrastructure projects must not be delayed or slow to be implemented.

The American Recovery and Reinvestment plan will be funded by borrowed money, likely pushing the year's budget deficit over $1 trillion.

BBC: http://news.bbc.co.uk/2/hi/business/7874407.stm
Star Tribune: http://www.startribune.com/politics/national/congress/39610517.html?page=2&c=y