What the New Economic Stimulus Package May Do for You

Financing Working Capital Needs & Other Key Small Business Advice

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President Obama Addresses the Recent Passage of the Economic Stimulus Package

Today President Obama is celebrating the passage of the American Recovery and Reinvestment Act as a "major milestone on our road to recovery," while still emphasizing that we have many miles yet to go.

"This historic step won't be the end of what we do to turn our economy around, but the beginning," he says in his weekly address. To get us there, he invokes President Kennedy, who said, "Do not pray for easy lives. Pray to be stronger men. Do not pray for tasks equal to your powers. Pray for powers equal to your tasks."

President Obama acknowledges that some people are skeptical about the plan given how Washington has performed in the past, which is why he's encouraging people to check back at Recovery.gov -- the site where, once the plan is in action, you'll be able to track the funds.

"Utlimately, this is your money, and you deserve to know where it's going and how it's spent," he says.

SMALL BUSINESS HIGHLIGHTED ON THE VIEW

The Economic Stimulus and What's in it for Small Business

By Catlin McDevitt, Inc. Magazine

When President Barack Obama first lobbied for support for his economic stimulus plan in late January, he touted it as an immediate lifeline for struggling businesses across the country. "The businesses that are shedding jobs to stay afloat, they cannot afford inaction or delay," he said.

The President's urgent appeal has swayed enough members of the House to pass the $819 billion bill, and the Senate, yesterday approved their $838 billion-version of the bill. During his press conference on Monday night, President Obama said he hoped the two houses of Congress could hammer out their differences and present him with a final bill by the end of the week.

Embedded in both versions of the massive stimulus package—which include funds and relief allocated across various sectors—are some breaks for small business. Many small business owners struggling to get by are now wondering what this plan would mean for them and, even more, if the relief it promises would come soon enough.

"We expect most of these provisions to be relatively quick moving," says Rep. Nydia Velazquez (D-NY), chairwoman of the House Small Business Committee, who voted in favor of the stimulus. In particular, she says that targeted tax relief measures should help small business owners in the short term.

For those companies that have slumped recently but performed well in past years, both versions of the plan would allow them to file for cash refunds. Businesses with a net operating loss (expenses exceeding revenue) for this year could use the loss to offset profits made in the past five years, extended from two years, according to Barbara Weltman, an attorney who specializes in small business tax law. "It's a good thing because this applies for 2008, so businesses that haven't filed their returns yet will be able to go back five years with 2008 losses and recoup the size of that loss," she says.

Those business owners who are in a position to buy new equipment, such as computers, refrigerators, or machinery, are in luck – the House and Senate plans would allow them to immediately write off the cost of these purchases up to $250,000. Of course, many struggling companies may not be able to afford to invest in big-ticket items now anyway, says Weltman. "This is not meaningful to most small businesses," she says, "especially in a year when so many are struggling to pay the bills."

And in an attempt to thaw the frozen lending market that has made it difficult for many small businesses to get the capital they need, the stimulus will likely include measures to facilitate borrowing backed by the Small Business Administration. These provisions may include increased loan guarantees to appeal to risk-averse lenders, waived borrowing fees, and higher maximum loan limits.

"This should really help to open things up and to get the money flowing again," says Todd McCracken, president of the National Small Business Association, though he remains skeptical of whether that alone will be enough to jumpstart the economy. "It's a gamble," he says.

For more on the immediate benefits to small businesses due to the new economic stimulus package, visit http://www.sba.gov/stimulus/.

For more on this story, visit Inc.com.

Senate Approves $838 Billion Economic Stimulus Bill

Earlier Tuesday, the Senate sailed to approval of its $838 billion economic stimulus bill, but with only three moderate Republicans signing on and then demanding the bill's cost go down when the final version emerges from negotiations.

Negotiators were working with a target of about $800 billion for the final bill, lawmakers said.

Negotiators hoped to seal agreement on President Barack Obama's economic stimulus package today after making good progress in the first rounds of closed-door talks.

Obama's negotiating team insisted on restoring some lost funding for school construction projects as talks began Tuesday in hopes of striking a quick agreement, but by late in the day it appeared resigned to losing up to $40 billion in aid to state governments.

"That's in the ballpark," Senate Finance Committee Chairman Max Baucus, D-Mont., said of the $800 billion figure late Tuesday.

Baucus had said earlier that $35.5 billion to provide a $15,000 homebuyer tax credit, approved in the Senate last week, would be cut back. There was also pressure to reduce a Senate-passed tax break for new car buyers, according to Democratic officials.

Within hours of the 61-37 Senate vote, White House Chief of Staff Rahm Emanuel and other top Obama aides met in the Capitol with Democratic leaders as well as moderate senators from both parties whose support looms as crucial for any eventual agreement.

House Democratic leaders promised to fight to restore some of $16 billion for school construction cut by the Senate. Those funds could create more than 100,000 jobs, according to Will Straw, an economist at the liberal Center for American Progress.

The moderate senators — Olympia Snowe and Susan Collins of Maine and Arlen Specter of Pennsylvania — are demanding that the final House-Senate compromise resemble the Senate measure, which devotes about 42 percent of its $838 billion in debt-financed costs to tax cuts, including Obama's signature $500 tax credit for 95 percent of workers, with $1,000 going to couples.

The $820 billion House measure is about one-third tax cuts.

For more on this story, visit the Associated Press.

How To Flourish in a Tough Economy

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Recession-Battered Employers Eliminate Near 600,000 Jobs in January

A deepening global downturn has left more Americans unemployed than in nearly three decades, as businesses continue to cut back aggressively in order to survive tough times.

The Labor Department reported Friday that 598,000 private sector jobs were lost in January, pushing the American unemployment rate to a higher than expected 7.6%, up from 7.2% in December.

Economists had forecast that 540,000 jobs would be eliminated, pushing the unemployment rate to 7.5%.

December job losses were revised to 577,000, from 524,000. Since Dec. 2007, 3.6 million jobs have been lost. About half of these job losses occurred in the final three months of 2008. More than 11.6 million Americans are now unemployed, after jobs were eliminated across nearly all major industrial sectors.

The speed and scale of the January layoffs were staggering. In the past week alone, Macy's laid off 7,000. Eastman Kodak announced 4,500 job cuts. Starbucks shuttered 900 stores worldwide, letting go 6,700 workers in the process. Tech also felt the pinch. Microsoft and Intel dismissed 5,000 staff apiece. Sprint Nextel axed 8,000. Heavy industry hemorrhaged jobs, indicating the severity of the slowdown worldwide. Caterpillar cut 22,110 jobs; Alcoa laid off 13,500; and Boeing fired 10,000. Merrill Lynch and Citigroup began job cuts that will eventually add up to the tens of thousands. (See the Forbes Layoff Tracker.)

"Businesses are rushing to cut as rapidly as possible and the more they cut now, the less we will see being cut three or four months down the road. They are shortening the adjustment period," said Joel Naroff, an economist at Naroff Advisers. "Get it out of the way and let's move on."

But it is not just big firms that are sharply cutting back. On Wednesday, payroll manager Automatic Data Processing reported that 522,000 private sector jobs were lost in January, and more than half of the layoffs were at medium-sized firms that employ fewer than 500 workers. (See "ADP Says Half Million Jan. Jobs Frozen Out.")

Widespread job losses and a massive pullback in spending caused the U.S. gross domestic product to fall at the fastest clip in more than twenty years during the final quarter of 2008, as businesses and consumers react to the spasms of a deepening credit crisis and the housing quagmire that sparked it.

The Obama administration has reacted aggressively to surging unemployment and a seized-up economy with a nearly $900 billion economic stimulus package that now awaits Senate approval. The problem is that the money will not really have an impact on the job situation until summer, according to Naroff. "Businesses won't run out and invest [just] because they have a little bit of cash, and households are going to save. Households and businesses start spending when the economy gets jump-started," he remarked.

The other big problem is that the rescue bill itself has caught a lot of heat for building so-called bridges to nowhere and other projects billed as "shovel-ready" that may not foster real economic growth. "A lot of people are cynical about how effective it's going to be, and that's damaging. The hope had been that there would be some confidence bounce as a result, but I'm not [expecting] that's going to happen," said Naroff. "I don't write off the bill at once. I have some hope for it, but people have to believe. I think we'll get something from the stimulus package, but it's going to take awhile."

The already grim government data do not include the growing group of Americans who have given up on finding a job or who cannot land a full-time position and so settle for something part time instead. The number of workers considered underemployed in the United States "has been shooting through the roof," according to Michael Feroli, an economist at JP Morgan Chase. "Underutilization in the labor force is worse than it seems, and it seems pretty bad."

Among the unemployed, the number who ended up with temporary jobs increased to 7.0 million in January. This measure has grown by 3.2 million during the past year.

This story comes courtesy of Forbes.com.