Congress approves $787 billion economic stimulus package.

The US congress recently passed the $787 billion economic stimulus package under President Barack Obama. The stimulus package which aims to reduce tax rates and trigger new federal spending is expected to help the US economy to come out of recession according to the Democrats. This new package cuts payroll tax by $400 in case of individuals and $800 for couples and is expected to create over 3.5 million jobs in the economy. Retired, aged and disabled, who do not pay payroll taxes, will be given a $250 payment by the Government. However, the bill has been opposed by the Republicans on the ground that it contains too much Government spending.
This stimulus package has also given incentives to the companies in the form of tax breaks which is expected to lower the tax burden on companies. It also aims at lowering tax burden on buyout firms that attempts to restructure the debt instead of filing bankruptcy. Moreover, the stimulus package plans to devote over $60 billion in increasing unemployment benefits and housing assistance programs, besides increasing Federal Government expenditure on infrastructure.
The US government had already resorted to monetary policy in the form of lowering of interest rates to increase money supply in the economy, in order to boost the expenditure and therefore income and employment. But the impact of the crisis could not be controlled only by the monetary policy and so fiscal policy, in the form of reduction in tax and increase in Government expenditure was necessary to fight the present stage of economic recession. Although the temporary tax cuts do not provide much incentive to employ more workers but the increased spending due to tax cut will help in increasing demand and hence employment through some increase in production.
Useful resources:

• Foreign Currency – Foreign Exchange from InterchangeFX. Best Currency Rates on Euro and Dollar. Foreign Currency for Business and Private Clients.