Thou Shall Be Stimulated
Posted January 24th, 2008 by Da King
What a relief. Where there was pain, there will now be only gain (so they say), as our House Of Representatives, in a rare show of bipartisanship, passed an economic stimulus package today.
It seems like all the pols are at least semi-happy over this package. Bush likes the plan because he says it is about the right size, approximately $150 billion. Republicans like the plan because it gives a tax rebate to taxpayers, $600 to single filers, up to $1200 for families. Democrats like the plan because it gives income tax rebates to people who don't even pay income taxes, in the amount of $300 (not sure how you can call that a "tax rebate". Might as well just call it what it is, a handout, a one-time entitlement program). The proposal still has to pass through the Senate, where several Democrats are promising to add to it's size, but it looks like this package will indeed be passed. Y'all can expect your checks around june or so, just in time to buy that new above ground swimming pool you've had your eye on.
Now, I'm all for taxpayers getting some of their hard earned money back, since the government has been stealing far too much of it for far too long, not to mention robbing you blind on your Social Security "Trust Fund" (wink, wink), but I have to ask whether or not this middle class targeted tax rebate is really going to stimulate the economy. I don't think so, at least not for more than one fiscal quarter of 2008. What the government wants us to do with our newly found rebate money is to go to the mall and immediately spend it like good little consumer-bots, thus pumping up some short term economic numbers, so we will avoid negative growth, aka, a recession. If you're wondering how this deals with our underlying economic problems, i.e. the subprime mortgage crisis, the falling dollar valuation, the massive federal debt, the offshoring of jobs, rising prices, or the credit card crunch, well, I don't know what to tell you. I'm wondering too. It's true that the fed just slashed the interest rate by 3/4 percent. That should help some. There is also a provision in the economic stimulus package to expand the ceiling for FHA loans, allowing more subprime loan holders to refinance. That should help a little. However, it seems to me that all the underlying economic problems are still right where they were before, maybe even a little bit worse. I didn't see $150 billion in spending cuts to offset the cost of this package, so the deficit gets bigger. The tax rebates weren't aimed at the investment class, so I don't see tons of new jobs and new revenue being created here to potentially offset the cost, or even come close to offsetting the cost. I didn't see any slashing of our highest in the world corporate tax rates to make our businesses more competitive (the Dems would NEVER allow anything this sensible). I didn't see any slashing of the capital gains double taxation rate to encourage investment (the Dems would NEVER allow anything this sensible either). I didn't see anything like that, which would REALLY encourage new businesses and new jobs to come to america, that would really make us more competitive in the global economy. I didn't see anything that would address the real reason for most of our economic problems, out of control government spending, that has every man, woman, and child in the country responsible for over $30,000 of government debt, or, counting all the future unfunded liabilities of the federal government, has each family on the hook for about $440,000 over the next few decades. Nope, nothing about all that. I didn't see anything really conducive to long term growth. I just see a shot of temporary painkiller to mask the symptoms of the illness, and very little to deal with the root causes.
So, take your shot of novacaine america, and try not to worry about what happens when the novocaine wears off, and that cavity you had becomes a full blown abscess. We'll let someone else worry about that…namely, your children.
There is one silver lining to this for conservatives - Democrats are now on record admitting that lowering taxes stimulates the economy. Don't forget this conservatives, and don't forget this america. Ever. It's the inviolable rule that reveals the fallacy of nearly all liberal policy.
January 24th, 2008 at 9:57 pm
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January 24th, 2008 at 10:56 pm
King writes, "[I] just see a shot of temporary painkiller to mask the symptoms of the illness, and very little to deal with the root causes."
Exactly, my man.
The stimulus package coupled with the sharp cut in interest rates by the Fed means 1) increased debt, 2) more inflation, and 3) a further devaluation of the dollar.
Oh sure, these actions will give some very minor & temporary relief to the middle class. They will also enable some sharpies to make a pile of money. But they will not do nothing to address the deep, structural problems in our economy & society. Rather, they will aggravate them.
Oh. I almost forgot. The stimulus package has another advantage. It will show the rubes that the pols really care about them, and this means votes.
The irresponsible game that is being played in Washington by both parties is to kick the problem down the road, leaving others to address it at a later date. Who are these "others?" Why, if they are not us, then they are certain to be our children.
But who can blame the politicians? This behavior of denial is exactly what we the people demand. You can tell this from 1) our own personal habits (we don't save, we spend; we don't delay gratification, we have to have it now) and 2) the type of squanderers we continually elect to represent us in DC.
This has been going on for many, many years. And each time the day of reckoning gets postponed, the eventual price that has to be paid increases.
As da King noted, the government has each family in the U.S on the hook for about $440,000 in outright debt and unfunded liabilities. [I've read/heard of much larger estimates. But what the heck? Once the numbers get this large, they become sureal anyway.]
In such an environment, you have to wonder what is the true agenda of politicians like Comrade Clinton and B. Hussein Obama who are currently calling for massive new spending and entitlement programs. Are they truly that stupid? Or, do they really want to precipitate an economic crisis so as to use the hysteria to grab more power for government and institute fascism to America …. like FDR did in the Great Depression? I don't know.
In any event, here's a tip. When you get you stimulus check — whenever that might be — use it to either 1) buy gold or 2) pay down your debt.
January 25th, 2008 at 11:49 am
Can you believe it? Miracles don't happen….but this is close. I mostly agree with King AND Ghost. Jot the date down….it's that memorable.
I said mostly.
King says: "It's true that the fed just slashed the interest rate by 3/4 percent. That should help some. There is also a provision in the economic stimulus package to expand the ceiling for FHA loans, allowing more subprime loan holders to refinance. That should help a little."
Slashing the FED rate while inflation is on the rise is totally irresponsible…..but then…..we're talking about the FED here.
The lifting of the debt ceiling for what FHA mortgages can be is a TOTAL MISTAKE. They are raising it from a ceiling of $417,000 to some $700,000 plus. The purpose is to bail out the speculators who were trying to enrich themselves on some easy real estate money.
I'm totally against this FHA bailout of gamblers.
Ghost: …."do they really want to precipitate an economic crisis so as to use the hysteria to grab more power for government and institute fascism to America …. like FDR did in the Great Depression?"
Are you saying that FDR instituted fascism in the 30's and 40's? Is that what you call FDIC, the WPA and the other programs that helped save the masses of Americans from utter poverty?
January 25th, 2008 at 4:28 pm
King, facts can be uncomfortable things.
1. FDR's misguided economic policies prolonged the Depression which didn't really end until the U.S. entered WWII.
2. FDR's National Recover Administration (NRA), the one whose symbol was a Nazi-like Blue Eagle and was lead by General Hugh "Iron Pants" Johnson, was thoroughly fascist in nature — so much so that both Hitler and Mussolini raved about it. What happened to the NRA? Fortuantly, it was declared unconstitutional by the U.S. Supreme Court.
And speaking of Roosevelt's National Recovery Administration (NRA), in the 1930's, the black press dubbed it the "Negro Run Around" and "Negroes Robbed Again" because of its racist nature. Again, it seems wherever you scratch the surface of the Dims, you find racism; it must go back to their days as slave owners.
3. But Roosevelt's New Deal wasn't original in its fasism. No, Woodrow Wilson's WWI and post war domestic policies were. Here, FDR was only trying to recreate what Wilson had enacted under the crisis of war.
January 26th, 2008 at 5:44 am
Rev,
You agree with me ? Hmmm. Where did I go wrong ? I better re-examine my conclusions.
Just kidding.
Actually, I even pretty much agree with your corrections to my original post. I should have been more clear about the Fed rate cut and FHA loan expansion instead of just mentioning them in passing. I should have pointed out that they may help some subprime borrowers convert to FHA loans or maintain a lower ARM, thus helping that situation a little, but as both yourself and Vince pointed out, they will most likely harm the economy overall.
This fake stimulus package is all based on what I call the pols desire for a painless economy, which is impossible after so many decades of irresponsible american fiscal behavior, led by, of course, the pols. Too bad we are probably going to elect big government tax and spend Democrats to make it all ten times worse. Batten down the hatches, america. The storm is approaching.
January 28th, 2008 at 11:17 am
Seems that Bush and his policies have put us into a depression and have mucked up the middle class. Ok…maybe not a depression, but the economic outlook is pretty gloomy and W is to blame. Giving people money will only make things worse and gloss over the situation. No one in DC is willing to do the hard things that it will take to get our country out of debt and back on track. The current administration only wants to make war and has done nothing for our country…except make it worse and the government bigger. W has been a great president–if you don't want another Republican in the white house.