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Subject: Stimulate Me?
Posted by: Boxman
- [571114225] Sat, Jan 19, 2008, 09:15
With all the talk of a stimulus package forthcoming I'd like to start a thread and see what you all think.
Here's an article from the WSJ online outlining some possibilities.
Bush, Democrats Spar on Stimulus
Drive for Deal Remains
Strong, but Sides Differ
On Who Gets Tax Relief
By JOHN D. MCKINNON, DAMIAN PALETTA and SARAH LUECK
January 19, 2008; Page A1
WASHINGTON -- As President Bush laid out his vision for an economic stimulus that could reach $150 billion, Democrats in Congress and the administration diverged about how to spread around its benefits.
The tension is emerging as a sticking point amid broad consensus that the government should do something quickly to prop up the lagging economy. The White House wants tax cuts to help a wide range of individuals and businesses. Privately, it has floated a plan that focuses on rebates of up to $800 for individuals and $1,600 for married couples.
In addition to tax cuts, congressional Democrats say they also want spending targeted at specific groups such as the unemployed. They have also discussed denying rebates to taxpayers who earn more than $85,000 and offering them to those who don't pay income taxes at all. Both ideas are likely to be opposed by the White House, at least initially.
President Bush's announcement of his plan Friday did little to calm financial markets. Market observers suggested Mr. Bush's comments disappointed investors who were expecting more. The Dow Jones Industrial Average, which has fallen nearly 9% since the beginning of the year, opened higher but lost ground as details of the president's speech emerged. The Dow ended the day down 59.91, or 0.5%, at 12099.30. It shed 4% in the past week.
The central elements of the plan will likely echo the package put in place during the slowdown that followed the end of the dot-com bubble in 2001. According to economists, the results were mixed. Many say the rebate checks, which were mailed only to U.S. taxpayers, successfully boosted spending. But certain business tax breaks from 2001 through 2004 had a more limited effect.
"My judgment, and I think the judgment of most of the empirical analyses that have been done, was that the rebates in 2001 did have some impact on spending and that that was of some assistance in keeping the 2001 recession relatively moderate," Federal Reserve Chairman Ben Bernanke, a former top economic adviser to President Bush, told a congressional committee in the past week.
Some have questioned the impact of the 2001 rebate. Joel Slemrod, an economics professor at the University of Michigan who has studied the rebate checks, said the infusion must be measured in the context of an economy whose annual output at the time was around $10 trillion. "That's not a huge stimulus," he said.
Despite the market's disappointment, the plan President Bush announced Friday, which is equivalent to about 1% of gross domestic product, came in at the high end of expectations in Washington. Administration officials said it would make room for roughly half a million jobs that otherwise wouldn't exist. In an interview, Treasury Secretary Henry Paulson said the president envisions certain business tax breaks that would be in place for no more than a year, to spur companies to make immediate investments.
"This growth package must be built on broad-based tax relief that will directly affect economic growth, and not the kind of spending projects that would have little immediate impact on our economy," Mr. Bush said at the White House on Friday morning, in a warning shot for Democrats.
Democrats argue the administration's approach avoids the real problem: homeowners squeezed by the housing mess and lower-income people hit by higher prices for heating oil and other goods. Democratic Sen. Max Baucus, chairman of the committee with jurisdiction over tax issues, plans a series of hearings on stimulus proposals starting Tuesday. In a written statement, he said he supports tax rebates as a "foundation" of the bill, but also wants to "build beyond tax relief to further address the needs of Americans."
For all their haggling, Democrats and Republicans said momentum was strong behind getting a deal, because both sides fear the political and economic price if nothing is done.
The differences reflect the still-fuzzy nature of the economic problem officials are trying to address. Unemployment remains fairly low at 5% and the overall economy, while slowing, isn't necessarily headed for a recession. "It is still a relatively healthy economy," said Mr. Bush's top economist, Ed Lazear, at a briefing Friday. "We want to keep it that way, and that's the reason that we're moving in this direction."
In the Senate, split almost exactly between Democrats and Republicans, leaders will have to find a way to avoid a drawn-out debate. Republicans want higher earners to be part of a tax rebate. Even some Democrats in the Senate are likely to want to push the $85,000 cap higher. The next step is a Tuesday meeting between top lawmakers and Mr. Bush.
In the summer of 2001, the government mailed a total of $38 billion in $300 and $600 one-time rebate checks to two-thirds of U.S. households. A 2004 study by economists from the U.S. Labor Department, Princeton University and the University of Pennsylvania estimated that the rebates directly increased aggregate consumption expenditures by about 0.8% in the third quarter of 2001 and 0.6% in the fourth quarter of 2001. In other words, most of the rebates quickly turned into spending.
Multiple studies say those most likely to spend rebate checks are low- and middle-income households with less access to credit. That boosts Democratic arguments that the rebates should be made available even to those who don't pay taxes.
"The largest bang for the buck tends to come from households that are relatively constrained in their ability to spend otherwise," said James Poterba, head of the economics department at the Massachusetts Institute of Technology.
Another likely part of the stimulus package is expedited tax deductions for businesses, designed to encourage investment. Between Sept. 10, 2001, and Jan. 1, 2005, businesses were allowed to immediately deduct from their taxes between 30% and 50% of investments on things like machinery and equipment.
Two University of Michigan researchers found that the tax incentive added 100,000 to 200,000 jobs and increased the gross domestic product by a scant 0.1% to 0.2%, a finding bolstered by other research. One problem: Spreading incentives over several years didn't provide an immediate spur to spending.
Phillip Swagel, the Treasury Department's assistant secretary for economic policy, said many businesses didn't take advantage of the incentive because they were coming off several quarters of losses and didn't need the extra tax break. This time, many businesses, including those in high-tech, remain profitable and might use a tax break if they could get it.
In laying out principles for what Mr. Bush termed a "growth" package, the president and his top advisers avoided talking about specifics. The unofficial White House plan, floated by the administration on Capitol Hill in recent days, would suspend the federal tax code's 10% income tax rate. That's the bottom rate that everyone with taxable income pays.
But millions of lower-income workers pay no federal income tax because existing breaks wipe out their exposure. According to Jason Furman at the Brookings Institution, 57 million households would get no benefit. That includes about 30 million households with wage earnings. The rest are mostly retirees. There are about 149 million households in all, which means about 37% of the total would get no benefit. Conservatives question the fairness of giving rebates to people who paid no income tax.
Democrats took the White House silence on details as a sign that it's willing to give ground. They are working on alternatives, such as a rebate for everyone who files a tax return. Other possibilities are rebating payroll taxes or sending rebates to those who receive the Earned Income Tax Credit or the Child Tax Credit.
--Michael M. Phillips and Mark Gongloff contributed to this article.
Write to Sarah Lueck at sarah.lueck@wsj.com |
| Only the 50 most recent replies are currently shown. Click on this text to display hidden posts as well. |
| 35 | Boxman
ID: 337352111
Tue, Jan 22, 2008, 13:38
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show me the businessman, that wont take that "stimulus" and put it in his pocket.
It's going there anyway. Whether I go to your place and buy a motorcycle or I buy stock. It's just a matter of how much of it winds up in increased employment or higher wages.
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| 36 | sarge33rd
ID: 99331714
Tue, Jan 22, 2008, 13:40
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none of it winds up as higher wages. C'mon Box...a one-time "shot in the arm" to any business, is not going to prompt that business owner to increase wages. Why would you even pretend to suggest that it might?
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| 37 | biliruben
ID: 5610442715
Tue, Jan 22, 2008, 13:40
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"It sounds like you're the kind of guy that needs help with the stimulus."
Naw - we're fine. Lots in the bank. Both my wife and I have good jobs, we're just frugal and conservative and not very big consumers. We'll find a bigger house in a year or three, once the froth is washed away, and housing finds reality again.
I don't really think $1600 is going to help many folks, except maybe Walmart and Costco.
$10,000 to the absolute neediest would be a better stimulus, and might be enought to tip the balance and keep a few folks on the edge in their homes.
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| 38 | Boxman
ID: 337352111
Tue, Jan 22, 2008, 13:43
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$10,000 to the absolute neediest would be a better stimulus, and might be enought to tip the balance and keep a few folks on the edge in their homes.
I just don't agree. If people's spending habits don't change it doesn't matter what their income is, they'll always have trouble because they don't know how to live within their means.
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| 39 | Perm Dude
ID: 56014229
Tue, Jan 22, 2008, 13:43
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I don't want to throw cold water on a kickass internet class war, but we don't know what the stimulus package says, let alone be able to draw conclusions about whether it will help or hurt.
The only solid thing I've seen is the ability for business to write off up to 50% of their plant & equiptment costs this year. That will absolutely help small businesses, and might give a shot in the arm to the commercial real estate business as well.
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| 40 | Boxman
ID: 337352111
Tue, Jan 22, 2008, 13:49
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Sarge: none of it winds up as higher wages. C'mon Box...a one-time "shot in the arm" to any business, is not going to prompt that business owner to increase wages. Why would you even pretend to suggest that it might?
That's why I suggested that I favored a business stimulus in post 1. Where I was going with bili was that I thought he was in the target market for the taxpayer stimulus. I wanted to know if 1600 to a responsible person would make a big difference.
If you tell me that we spend 150 billion and those folks will get out of debt with all of it, then I'll hear out the rest of it. Otherwise, I'm convinced people are taking the 1600, going to Best Buy, getting a TV for 4000, and financing the remaining 2400 on flex/choice pay, deferred interest, no monthly payment necessary until 2024.
I think if we spend 150 billion on tax credits for business, get rid of the oil company subsidy money they talk about to increase the overall stimulus, and institute some real incentives for R&D and a higher % of employer paid health insurance that would be going in a better direction.
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| 41 | biliruben
ID: 5610442715
Tue, Jan 22, 2008, 14:09
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"If people's spending habits don't change it doesn't matter what their income is, they'll always have trouble because they don't know how to live within their means."
Probably true for most, but that's why if you want a stimulus, you give to those who will spend it! Free-spenders heading headlong toward's bankruptcy.
Not tightwads like me.
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| 42 | walk
Dude
ID: 32928238
Tue, Jan 22, 2008, 15:08
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Compelling thread! 4 cats. Bili baby, you know the 3+ cat rule. You are now, techically, truly, "weird." ;-)
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| 43 | biliruben
ID: 5610442715
Tue, Jan 22, 2008, 15:16
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Heh. Want one? My wife's a vet.
I need to move somewhere where there are coyotes in larger numbers. I'll have to consult the coyote tracker map when considering my next move. That should help get me back from the brink of weird!
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| 44 | boikin
ID: 59831214
Tue, Jan 22, 2008, 18:37
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"If people's spending habits don't change it doesn't matter what their income is, they'll always have trouble because they don't know how to live within their means."
Probably true for most, but that's why if you want a stimulus, you give to those who will spend it! Free-spenders heading headlong toward's bankruptcy.
interesting way to save the economy, short term fix at best probably leads to bad long term consequices.
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| 45 | biliruben
ID: 5610442715
Tue, Jan 22, 2008, 18:47
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Well... if you want a long-term fix, then let the chips fall where the may, and start regulating the banking industry. It may be a long recession then.
I sounds to me like Bernanke is recommending only a short-term stimulus to get us through the tough bit, but for all his focus on the Great Depression, he's seems a bit out of his depth right now, so maybe that's not the best thing after-all.
If a short-term plan is what you want, give it to folks who will spend it. Now.
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| 46 | Jag
ID: 360261522
Tue, Jan 22, 2008, 19:23
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I was a dog fan until I started traveling due to work and switched to cats. I have never been so attached to an animal as I am to my main pet Rat Cat. I have 2 cats (one less than the geek minimum) and since watching the dog whispering, I love studying animal traits like the Alpha pack leader and different instincts passed on to the domestic species from their wild relatives.
Bili, your Liberal union card is being withdrawn for your crass comments about cats and I am reporting you to PETA for further penalties.
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| 47 | biliruben
ID: 5610442715
Tue, Jan 22, 2008, 19:34
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What can I say. I'm a dog person. Tell PETA, just not my wife (she hates PETA with a surprising passion).
But she babies our dog, and now I need to retrain the bitch because she's getting confused about hierarchy, and that ain't cool with a baby in the house.
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| 48 | Jag
ID: 360261522
Tue, Jan 22, 2008, 19:56
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The dog or the wife?
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| 49 | Boldwin
ID: 1055190
Tue, Jan 22, 2008, 23:19
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Nothing worse than a bitch confused about the hierarchy. Not the way I would normally put it but I'll play along.
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| 50 | angryChair
ID: 100501014
Wed, Jan 23, 2008, 13:16
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Wow--this thread took a sharp turn straight into nonsense!
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| 51 | biliruben
ID: 5610442715
Wed, Jan 23, 2008, 13:22
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I resemble that remark.
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| 52 | biliruben
ID: 5610442715
Wed, Jan 23, 2008, 13:33
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When I opened that giant, obvious hole, I assumed no one would be so crass as to jump through it.
Surprise.
I caught a twit and a misogynist.
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| 53 | walk
Dude
ID: 32928238
Wed, Jan 23, 2008, 14:03
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Well, I could not help it...sorry to initiate the derailment with the "4 cat weirdo" crack!
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| 56 | biliruben
ID: 5610442715
Wed, Jan 23, 2008, 14:09
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In Seattle, there is actually a weirdo law. No more than 3 cats allowed...
...Or you have to move to NYC - Wasn't someone keeping a tiger on the Upper West Side someplace?
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| 57 | walk
Dude
ID: 32928238
Wed, Jan 23, 2008, 14:33
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bili, I would have to guess that there are more weirdos in NYC than there are people in Seattle. NYC just is unreal. You walk down the street, and you see folks muttering, dressing not like what someone their age would dress (and I don't mean goth, punk, hippie, etc. just bizarro combinations of looks on a person of random demographic background), arguing...with themselves or someone else who is not even paying attention, walking cats, pampering dogs, Cheney-loving, drunk, drinking, fighting, it just goes on and on. I'll never forget getting a copy of what I termed "the lunatic manifesto" from a schizo (for sure) on a bus one time. He was muttering and then handed me a photocopy of something and it was like an article about extraterrestrials with his scribbling all over the margins about hearing voices, government intrusion, typical paranoid schizo stuff (sad, really). We just have a lot of stuff like that, but more so, eccentrics of all ages, races, and genders (there are seemingly more than two). It's likely a density thing, but man, it sure feels like we corner the market on "all kindsa folks."
P.S. I live in SF, in the Haight, for five years...no comparison.
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| 58 | Jag
ID: 360261522
Wed, Jan 23, 2008, 16:31
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P.S. I live in SF, in the Haight, for five years...no comparison
That explains alot.
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| 59 | walk
Dude
ID: 32928238
Wed, Jan 23, 2008, 17:15
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I also lived in Virginia, for five years, nowhere near DC or any other big city, just before then. Reconcile.
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| 60 | Jag
ID: 360261522
Wed, Jan 23, 2008, 17:33
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A gay redneck Liberal, hell, no wonder you are always so confused, you are not sure if you should like yourself, hate yourself, beat yourself up or hump a bull.
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| 61 | Pancho Villa
ID: 495272016
Wed, Jan 23, 2008, 17:59
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walk..
I'm curious. As a professional shrink, is it possible for you to properly diagnose the obvious mental malady that inflicts Jag, or is an in-depth series of one on one sessions required?
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| 62 | Mattinglyinthehall
ID: 454491514
Wed, Jan 23, 2008, 18:08
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Awaiting the "devastating" comment from Baldwin in response to post 60.
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| 63 | Boldwin
ID: 1055190
Wed, Jan 23, 2008, 19:07
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Jag
You are drawing way too much info from Walk's trajectory.
About all we might infer is an understanding of why he thinks liberels have an acceptible level of common sense...compared to who he rubs elbows with...
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| 64 | Boxman
ID: 571114225
Wed, Jan 23, 2008, 20:00
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Jag: A gay redneck Liberal, hell, no wonder you are always so confused, you are not sure if you should like yourself, hate yourself, beat yourself up or hump a bull.
Don't forget liberal outrage. Otherwise that list was devastating.
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| 65 | sarge33rd
ID: 76442923
Wed, Jan 23, 2008, 20:25
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Jag, Boldy and Box.....3 Blind Mice.
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| 66 | Boxman
ID: 571114225
Sun, Jan 27, 2008, 05:12
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Stimulus Details
Simple, right? Not so fast. It's actually an advance rebate on the taxes you paid, so you're getting what would otherwise be your money. And, some people have debts to pay, and using that rebate to pay down debt (or save) won't provide any stimulus.
If someone wanted to, could they reject the check from the gov't and then not get hit at tax time?
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| 67 | Perm Dude
ID: 120552719
Mon, Jan 28, 2008, 00:35
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I haven't seen the exact plan to verify that opinion, but (if true) this is what Bush did last time--essentially loan back people their own taxes for the next year.
The better plan, IMO, is to put the money into a money-market account, then use it to pay whatever taxes might be owed next year. Since most people in that bracket get refunds (with the average refund about $2400), they still might not need to pay taxes--they would just get a smaller refund.
Ironically, I think that if the rich were to get the checks (as well as the middle class, or instead of), more money would be pumped into the economy. By and large the debt carried by the rich would not be affected by a check like this, and more likely to get blown (which is what the government wants).
Clinton did a bit of a stimulus package, but did most of it internally by ramping up government spending in the short term and so forth (mostly, but telling many agencies to spend their budgetted amounts early whenever possible. So for example instead of buying paper clips all year long, they bought a year's worth in the first month and just stored them. That sounds like a better way to do it if you want to pump money into the economy directly.
That said, a check would be nice, since I'll use it to pay down current debt.
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| 68 | Tree
ID: 3533298
Mon, Jan 28, 2008, 10:35
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i'm sorry i was traveling and missed the best parts of this thread from the Ignorant Three.
P.S. I live in SF, in the Haight, for five years...no comparison
That explains alot.
that politically he probably leans left, he likes cities that have a wide variety of culture, pretty nifty Chinatowns, and a strong public transport system?
oh wait, you meant...
yea, you're an idiot.
As a professional shrink, is it possible for you to properly diagnose the obvious mental malady that inflicts Jag, or is an in-depth series of one on one sessions required?
who needs to be a pro? i just mentioned the problem.
hopefully, he hasn't procreated and further diluted our gene pool.
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| 69 | Mattinglyinthehall
ID: 454491514
Mon, Jan 28, 2008, 11:54
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Ironically, I think that if the rich were to get the checks (as well as the middle class, or instead of), more money would be pumped into the economy. By and large the debt carried by the rich would not be affected by a check like this, and more likely to get blown (which is what the government wants).
Agreed. I also fail to see the why the Republicans stood so strongly against food stamps. Unless I misunderstand the way foodstamps work, all of that money would be go directly from consumers to retailers and the bulk of it would be used to pay for American produced goods. Further, it has the added benefit of helping people who are most in need of financial assistance.
Am I missing something?
Like many people who reside in my area of the tax spectrum, any portion of my check that doesn't go toward credit debt will go into my savings account. Little stimulus gets created by giving that money to me, not that I won't be happy to take it.
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| 70 | biliruben
ID: 5610442715
Mon, Jan 28, 2008, 13:23
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"By and large the debt carried by the rich would not be affected by a check like this, and more likely to get blown..."
I don't understand the logic. The rich see something they like, they buy it. Their levels wouldn't increase one iota with an extra few bucks of their own money (I think Fox is right in their interpretation btw) that they get to keep for an extra year. They generally ain't fooled by slight of hand, in any case.
If you want a stimulus, give it to 40-50% of folks who live hand-to-mouth. They spend every cent they get, and then some.
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| 71 | Perm Dude
ID: 46046287
Mon, Jan 28, 2008, 13:57
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Polling is showing that these people aren't going to buy stuff (which is the point of the package). They will be paying down debt, like over due mortgage payments, credit cards, etc.
If the idea is to help those people out living as they are, I agree. But the point is to give it to people in the hopes that they will buy stuff with it. By and large, the rich will blow it and the middle and lower class taxpayers will use it to pay bills.
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| 72 | Mattinglyinthehall
ID: 454491514
Mon, Jan 28, 2008, 14:00
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Right. Its touted as a stimulus package, not a personal financial assistance package.
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| 73 | biliruben
ID: 5610442715
Mon, Jan 28, 2008, 14:06
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I just don't agree with your analysis, PD. The rich are rich, right? They could wipe their arses with this check and only notice due to the painful rectal itch. They aren't going to change their spending habits at all. Not a bit.
In contrast, the poor and lower-middle class will spend it. Quickly. Maybe they'll toss it toward a CC bill, but that will only allow them to max it out again at Target next week.
Sure, there are frugal middle class who may not spend it, and save it or pay down debt. I advocate not giving it to them (or the rich). Just give it to those who have recently taken a blow to their FICO. You know that those folks are likely irresponsible and will spend it even before they see it.
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| 74 | Richard
Dude
ID: 204252420
Mon, Jan 28, 2008, 14:06
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As one who is "too rich" to get the stimulus check, it's kind of interesting to ponder what I would do with it if I got it. For me, it would roll over into my monthly cash flow account (checking) and effectively disappear. I wouldn't go out and buy something that I wouldn't have bought without the check. I suppose at the end of the day I'd have a bit more money in savings since the stimulus check would offset a bit of college expenses for my daughter or vacation expenses for my wife and me - which would mean I wouldn't have to dip into savings to fund these expenses as deeply as before. Of course this is just hypothetical since I won't be getting a check.
If you get one, go out and spend it, the econmomy (and country) needs your help;-)
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| 75 | Perm Dude
ID: 46046287
Mon, Jan 28, 2008, 15:40
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Well, the people certainly might be lying to the pollsters. Wouldn't be the first time. But combined with high foreclosure rates, credit card maxes, and so, it might end up that people who get the checks will pump it into the economy by buying stuff. I know I won't however, and as to whether I'm "typical" or not I don't really know.
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| 76 | Building 7
ID: 471052128
Tue, Jan 29, 2008, 13:20
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It's a sad day for the USA when saving money is a bad thing.
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| 77 | Perm Dude
ID: 46046287
Tue, Jan 29, 2008, 13:28
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Blame the Fed (well, you probably do anyway).
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| 78 | biliruben
ID: 5610442715
Tue, Jan 29, 2008, 13:36
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Interesting, Richard. My guess is that you are probably typical for your income range.
B7 - I generally feel the same, but I'm not really sure why when I think a bit on it. I guess it depends on what you mean by saving.
There is this image (I posit mythical) of the virtuous American who dutifully drives to the factory and works 9-5 for 40 years, religiously stuffing away 10% of his paycheck into his savings account returning 2.4%, and being a fickin' millionaire when he retires at 65.
But is that really virtuous? Or even smart? Wouldn't it be more virtuous and also more smart to take that 10% and lend it to your neighbor, who has a great idea about how to build a greener lawnmower, or a kinder mouse trap, or what-not, but only needs a bit of funding to make it a reality? Or, more realistically, buy a bit of stock in a windmill maker or solar power company so that they can develop cleaner power so that we can continue to grow without poisoning ourselves in the process? And maybe return you better than the 2.4%?
I think the myth of the virtuous saver, that so many of us (including me) have had ingrained in our brains since early childhood, might not be a good myth to continue to propagate.
Particularly if inflation is running at 2.5%. ;)
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| 79 | bibA
ID: 370292814
Tue, Jan 29, 2008, 15:29
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My feeling is that most of us feel that we would not spend an extra $600, or whatever they may receive. Then I realize how most of us actually do act if we have some extra pocket money.
Is there anything on earth that is easier to do than spend money? Most of us, if we have some "extra" cash, do in fact end up spending it, a little here, a little there, just because being "extra", we will subconciously feel that we won't suffer the consequences of not having sufficient funds for necessities such as food or bills. How many times have you had some extra pocket money, and a few days later had to ask yourself just where it went?
That being said, it would seem to me that a few hundred bucks being spent here and there would be a drop in the bucket compared with what may be needed to aid national economic problems.
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| 80 | The Beezer
Dude
ID: 191202817
Tue, Jan 29, 2008, 22:13
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bili, thanks to the magic of fractional reserve lending, that 10% being thrown into a savings account is enabling many times that value in loans that the bank can make at a profit to startups, home buyers, people that need cars, etc. Perhaps we should be thanking those folks for making lending possible for everyone else that is spending money on beer and hookers and wasting the rest. :)
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| 81 | AirJar
ID: 351123160
Wed, Jan 30, 2008, 23:53
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I just read the structure of the rebates. Whoooo Hoooo! I get nothing! I'm going to spend it all.
Oh, yeah...let's look to washington to fix our personal financial problems....this is a VERY sad situation.
When are you people going to realize that BIG government means the end of personal freedom and responsibility?
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| 82 | Perm Dude
ID: 33029308
Thu, Jan 31, 2008, 05:34
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Some of us "liberals" got that some time ago.
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| 83 | Madman
ID: 230542010
Mon, Feb 18, 2008, 16:28
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Samwick on the rebate ... He (independently) expresses almost my exact sentiments ...
...
The agreement reached by the House and White House in January addressed two problems that the United States does not have.
First, the nation does not have an underconsumption problem. The personal saving rate hovers around zero. The government’s budget has been in surplus in only four of the last 35 years. The nation has run current account deficits with the rest of the world for the last 15 years. If we are looking for additional economic activity, consumption is a poor choice.
Second, we do not have an underinvestment problem in the private sector. Interest rates have been very low by historical standards, and the Federal Reserve intervened immediately to lower them even further. With or without additional tax-based incentives, corporations have plenty of access to cheap credit to expand their capital stocks.
Where our country does have an underinvestment problem is in our public infrastructure. The failed levees of New Orleans. The collapsed bridge in Minneapolis. Those are but two recent examples of an area where the federal government is falling down on the job. Regrettably, they are not the only examples. In 2005, the American Society of Civil Engineers released a report card in which it estimated that $1.6 trillion would be required over a five-year period to restore the nation’s physical infrastructure to good condition.
...
I also think Huckabee was onto something ... economists ignore the potentially differential incremental impact of additional income on domestic versus foreign consumption. In today's society -- especially in the lower and upper income ranges -- I suspect that the induced quantity of imports is rather high.
The good news? The CBO boosted its estimate of GDP by 0.2% for 2008. Of course, the 2009 growth estimate is down by 0.6%. I hope we enjoy our new Wii's we all get this summer. Well, some of us poor folk, anyway.
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| 84 | WiddleAvi
ID: 251113917
Mon, Feb 18, 2008, 17:46
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Does anyone know if this is just an advance on your 2008 taxes ? Rebate is advance on 2008
Not so fast. It's actually an advance rebate on the taxes you paid, so you're getting what would otherwise be your money.
Or is this 'free money' IRS Website
Q. Will the payment I receive in 2008 reduce my 2008 refund or increase the amount I owe for 2008?
A. No, the stimulus payment will not reduce or increase your refund when you file your 2008 return.
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| 85 | Perm Dude
ID: 2138188
Mon, Feb 18, 2008, 18:16
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The bill is HR5142, and it looks like the latter one is correct. So long as a 2007 return was made, this is a credit against taxes to be paid for 2008, from what I can tell.
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| 86 | biliruben
ID: 5610442715
Fri, Feb 22, 2008, 14:28
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I wholeheartedly agree with Samwick.
We need to throw some boatloads of money into public infrastructure, not only because our country is crumbling, but also because of the mix of workers who are are going to be hit hardest by this downturn.
All those contractors and construction workers who have been living high and buying a bit more house than they could afford while ridding high these last 5-10 years are going to be looking for work. Building bridges, roads, bike paths, monorails and light rail is a great, and glaringly necessary way of keeping these folks working and paying their mortgage payments.
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