Stimulus plan stirs controversial opinions

By: Rachel Nelson
www.universitystar.com

The $787 billion economy stimulus plan signed into law by President Obama Tuesday caused relief and concern among politicians, economists and taxpayers.

William Chittenden, associate professor in the department of finance and economics, said the short-term effects of the plan will benefit the economy but long-term results depend on the actions of elected officials.

“Are they going to have the discipline to cut back once the economy starts rolling again?” he said. “It’s very difficult for politicians to let go of money once they start spending it.”

Chittenden said the government cannot continue to spend vast sums of money without detrimental consequences

“Although this might not be the perfect plan, doing nothing is not an option,” he said.

Chittenden compared the economic condition of the United States to a recession that took place in Japan during the 1990s. The period is referred to as “the lost decade” because it took the country 10 years to climb out of economic turmoil.

“The economy would eventually work itself out, but it would take years and years,” Chittenden said. “It’s unacceptable.”

Fidencio Leija, international studies and geography senior, said he followed the progress of the economic stimulus bill as it made its way through the legislature. Leija is in favor of the bill because it appears best for the country, he said.

“No one has a crystal ball to know if this is going to fix it or not, but we have to make a decision right now for the people that are suffering,” Leija said.

Leija, a member of College Democrats, believes it is important for members of both parties to work together and make compromises to relieve the financial crisis.

“Only three moderate republicans came on board to support the bill,” Leija said. “There were no republicans who voted for it in the House. In my opinion, we’re still having issues on the whole philosophy and ideology each party has, rather than looking at it as a United States issue.”

Steven De La Cerda, public relations chair of College Republicans, said the stimulus package saw little support from the right.

“Republicans finally came to their senses and remembered they are fiscally conservative, and spending billions of dollars isn’t the answer to solving this crisis,” he said.

De La Cerda, public administration junior, said government action is necessary at this time, but the bill contains excessive spending that will not benefit the economy.

“I do believe an economic stimulus package of some sort is necessary, but without all of the pork spending, that will do little to stimulate the economy,” he said.

“Bad business by banks and automakers should be reason enough for failure. Government intervention with taxpayer money and excessive spending that will increase our debt is not what will solve this economic crisis.”

Instead, tax cuts, less government spending on special programs and raising consumer confidence would be means of progress for the economy, De La Cerda said.

Chittenden called the stimulus plan a good use of debt, but acknowledged it is still risky. He said it is like college students who finance their education with loans.

The end result is good if the students take steps to pay the money back, but will remain in debt if they continue to borrow.

The bill’s amount is several billions of dollars less than the original package called for, but it still stirs controversy.

“This amount is ludicrous, mainly because it does a lot for special interests and government programs that do not have a direct stimulate to the economy,” De La Cerda said. “It is one of the biggest spending programs since World War II, which encompasses down payments for Obama’s healthcare, energy and education initiatives. This does not stimulate the economy nor put us on the road toward prosperity.”

Chittenden said he feels the sum is good as long as the money is spent fast.

“That definitely can get the economy stimulated,” he said. “If we spend it all in the next year, it’s definitely going to have a (great) impact on the economy.”

De La Cerda said he does not believe this is the last stimulus plan Obama will introduce. He was proven right when Obama proposed a $75 billion forclosure package.

“This is very dangerous for our country because our grandchildren will have the burden of paying off our debt,” De La Cerda said. “Obviously the government plays a vital role on the economy, but staying true to our capitalist values and staying away from Obama’s socialistic views would better suit America and its economy.”

The outcome of the stimulus bill will not be known until the money is spent and time passes.

“We’re all crossing our fingers,” Leija said. “We really don’t know what’s going to happen.”

Students could benefit from Pell Grant increase

By: Rachel Nelson
www.universitystar.com

Higher education will reap some benefits from the $787 billion stimulus bill that was signed into law Tuesday, but the gains will not be what some hoped for when the plan surfaced.

Allocated funds for higher education construction and the federal work-study program were reduced by U.S. Senators while making cuts to the package.

President Barack Obama addressed the nation in early January before sworn into office, communicating his optimism about the proposal to build educational facilities.

“To give our children the chance to live out their dreams in a world that’s never been more competitive, we will equip tens of thousands of schools, community colleges and public universities with 21st-century classrooms, labs and libraries,” Obama said during his economic recovery speech Jan. 8. “We’ll provide new computers, new technology and new training for teachers so students in Chicago and Boston can compete with children in Beijing for the high-tech, high-wage jobs of the future.”

According to information provided by the Texas State Financial Aid Office, there was a 1.1 percent increase for allocated federal work-study funds during fiscal years 2008 and 2009. However, the number of work-study positions was reduced as a result of the increase in minimum wage that occurred in July 2008.

The number of students receiving Pell Grants will see an increase, and the maximum amount of the grants are greater than previous years.

The original House package sought to increase the grant amount by $500 and the number of recipients by 800,000 in the next year.

The maximum amount in the revised Senate version of the bill for a Pell Grant is up $281 during the 2009-2010 award year, but will jump to $400 in 2010-2011. The number of recipients will increase in 2009-2010 by 175,000 and 250,000 in 2010-2011, respectively.

Sidencio Leija, College Democrats member, said he was disappointed in the decision to cut educational facility funds because of the jobs they would have created for Americans.

“I think by them increasing (Pell Grants) by this amount, it will hopefully reduce the amount of students going into debt over the four or five years in college,” Leija said. Leija is a veteran of the U.S. Navy and said grants and the G.I. Bill have made it possible for him to focus on his studies rather than having to work while in school.

The Financial Aid Office said 6,611 Pell Grants were awarded at Texas State, according to data from 2007-2008. The office encourages students to reapply for grants each year because they may be eligible for subsidized need-based loans, such as a Federal Direct Loan, if they do not qualify for Pell Grants.

A higher tax credit is designed to provide relief for college students and their parents.
The legislation states 100 percent of tuition and related expenses paid by citizens during the taxable year will be credited provided the amount does not exceed $2,000. Twenty-five percent will be credited for costs between $2,000 and $4,000.

Leija said he thinks it is a great time to be a student during this economic turmoil, especially for freshmen and sophomores because they will not have to struggle to find jobs until after they graduate.

“They hopefully will be there at the point when things are going up,” Leija said. “If you’re a junior and senior, looking for a job is going to be tough.”

Graduate school is something Leija said he is looking into to avoid the dwindling job market for two more years.

“We don’t know what’s going to happen,” Leija said. “We won’t see any results until the beginning months of next year if we get lucky.”