Get in line for your share of the stimulus package

When the government starts throwing around billions of dollars, everyone has the same questions: What’s in it for me? How will it affect my family? How do I get some of that fiscal stimulation in my life?

Some provisions of the American Recovery and Reinvestment Act of 2009, signed by President Barack Obama in February, are still a bit sketchy, but there are things that we already know. And though the middle class has been targeted, there’s some good news here for almost every American. Some of the most notable provisions include:

Tax breaks for family spending. There are tax incentives for sending children to college, buying a first home, buying a new car, or upgrading inefficient heating/cooling at your existing home. Many of these are expenses that families encounter as a matter of everyday life, so taking on those expenses now could put dollars back into your pocket.

You’ll get to deduct state and local sales taxes on a new car (priced up to $49,500) through the end of 2009, and first-time home buyers can get an $8,000 tax credit if they, too, buy in 2009. You’ll have to keep the house for three years, however, or give back the $8,000.

Changing environment for healthcare. If you lose your job, the government will pick up a substantial chunk of your COBRA health-insurance premiums. These are high-dollar continuation costs for people who have lost their jobs, so this break can save thousands for unfortunate families. It’s likely that this first step will usher in some dramatic changes in health insurance and premiums, so keep a close eye on future legislation.

Construction boom for public roads and buildings. Necessary spending, perhaps, but the daily commute will likely lengthen as these projects ramp up. Of course, this is great news if anyone in your family works in the construction trades. The added investment in police, energy, and the environment will create thousands of new jobs.

Certainly, not all of the stimulus news is good. There are these points to consider:

Higher taxes, especially for top earners. There will certainly be higher income taxes for America’s top tier, but some analysts suggest that won’t be enough to cover the expenses. This is a massive plan, and many of its total costs won’t be known for years. It’s likely that we’ll see rising future rates across multiple wage and tax categories.

Higher interest rates and inflation, eventually. It’s traditional that government spending has a price, and that price is inflation. Most economists see at least some inflationary pressure rising from government spending of this magnitude. It may be years in coming, but wise families will watch carefully for future developments.

Our world has just changed, and this creates both opportunities and challenges.

While some of the programs and policies of the stimulus package will affect our financial lives for decades, the purpose is to make our economy healthy again in the short term. That’s a noble cause, and the costs and benefits are simply part of the plan.

Tax breaks are designed to encourage beneficial behavior, and all policy decisions carry costs. The key for family financial health is understanding the benefits and costs, and using them in future decision-making.