American Recovery and Reinvestment Act -- Sufficient Stimulus?

Estimated tax payment relief is also available, allowing small business owners the chance to make lower quarterly estimated tax payments. With ARRA, if an individual earned more than 50 percent of his/her gross income in 2008 from a business that employed fewer than 500 people, then the estimated quarterly payments for 2009 will not exceed 90 percent of the tax liability shown on his/her 2008 tax return.

The one glaring omission from the package, which Margolis feels would make a tangible difference, is the need for bank credit. “The only way to manage a company that’s losing money is to be able to borrow money to cover it. I tell printers, if they’re having a hard time, the objective isn’t to make money, but to survive the next two years. If you can survive, there will be fewer printers left, and the potential for making money will be higher than it normally would be. Survival would happen a lot easier if more credit were readily available.

“The credit issue is what caused the economic downturn to begin with,” he contends. “The bailout helped the banks, but the banks are still very stingy with the money and they’re not passing it out, especially to small businesses. The bailout didn’t accommodate, in a sense, an investment in the economy. It just allowed the banks to survive.”

Gauging Success

Ronnie Davis, vice president and chief economist for the PIA, feels the short-run impact of ARRA should be “slightly positive” in accelerating the recovery and shortening the duration of the recession. The degree of success, according to Davis, hinges on four elements:

• How much of the package is composed of spending on goods and services or tax cuts that result in actual economic output (Gross Domestic Product)?