Economic Stimulus Package: Rebate or Welfare?
CNSNews.com) – Congress and the White House have reached tentative agreement on a $150 billion economic stimulus package, but analysts on the political left and right differ on whether this deal will help boost the U.S. economy or whether it’s just another swipe of the federal government’s credit card.
The proposal would give checks up to $600 to individuals, and married couples could get up to $1,200, plus $300 per child, with no limit on the number of children eligible. People with an adjusted gross income of $75,000 or couples who make $150,000 would get less, depending on how much higher their income is above these thresholds.
The package also includes tax incentives for small businesses and raises the cap for federally insured home loans, meaning Fannie Mae and Freddie Mac could sign off on loans of $729,750, up from the current cap of $417,000.
Welfare. Pure and simple.
I agree!
The top 5%, those who pay 90% of the total tax revenue, aren’t getting a dime…meanwhile, those who don’t pay taxes are getting a check. Calling this a “rebate” is like calling Vietnam a “conflict.”
The best definition is desperation.
The U.S. is at risk of economic collapse. While most believe that we can avoid that, it is only because we have recognized the risk and trends in place and are taking action.
The question now becomes, is it action that will delay the collapse, avoid it entirely or over correct and cause a “bubble” that later will cause pain to those in the “bubble” when it breaks while others that don’t join in that “irrational exuberance” do quite will and may even profit.
quote:
Such stimulus, however, is futile. Government cannot create genuine spending power; the most it can do is to transfer it from Smith to Jones. If the Treasury sends a stimulus check to Jones, the money comes from taxes, from borrowing, or is newly created.
If it comes from taxes, the value of Jones’s stimulus check is offset by the greater taxes paid by Smith, who will then have fewer dollars to spend or invest. If Uncle Sam borrows to pay for the stimulus checks, this borrowing takes money out of the private sector. Any dollars borrowed – whether from foreigners or fellow Americans – for purposes of stimulus would have been spent or invested in other ways were they not loaned to the government.
The only other means of paying for such stimulus is for the Federal Reserve to create new money. Unfortunately, this option leads inevitably to inflation.
The Christian Science Monitor
Also, even if stimulus works in the short run, we stimulate in bad times but aren’t repaying in good times. That is when we lose ground. If we can’t repay during good times we are expanding and increasing the problem, not solving it.
I was going to compare “economic stimulus package” to a trip to the massage parlor but decided against it.
By the time the money gets into consumers’ hands, the recession will be over.
David, do you believe this will be a quick recession? I little downturn, and then it’s over?
If so, why do you think this?
No, but I do think that stimulation this summer isn’t going to make a bit of difference.
This one will be ugly: the subprime mortgage crisis, a major housing slump, stock market shocks, financial instruments devaluations, very high oil prices, extremely low household savings and high debt-service ratios.
But, I’m always said to be too optimistic!