The "Stimlulating" Tax Rebate

[StrykerFSU]

Since this was brought up in another thread...

Most of us who paid taxes will be getting a nice little check from the Federal Government in the coming weeks that is supposed to encourage us to spend money and thus, spur the economy. Only problem is the rebate is not paid for. It is just being added to our national debt. From yesterday's TMQ:

Announcing the economic stimulus package agreed to last week by both parties in the House of Representatives, Speaker of the House Nancy Pelosi declared that typical Americans can expect to receive a "stipend" of $300 to $1,200. Stipend -- will we get a federally funded sherry hour, too? Calling a government check a "stipend," to make it seem lofty and grand, reflects the modern affection CEOs have for calling the cash they receive "compensation" rather than pay, and consultants and speakers insist on saying they are receiving "honoraria" rather than pay. There is nothing wrong with receiving pay! And no reason to employ euphemisms.

The stimulus bill will cost about $150 billion and consists entirely of deficit spending. The secondary euphemism being employed in Washington is to call the checks "tax rebates." But they are not rebates, meaning partial returns of monies paid -- they are pure borrowing. Which is to say, Congress will award most current American adults $300 to $1,200 each, then send the bill to future American adults. Suppose that instead, each American adult today set aside $300 at 5 percent interest. In 20 years, that money would grow to $800, and likely much more if invested in stocks. Such savings would be good for the U.S. economy, which, since 2001, has seen a negative national savings rate. China's national savings rate is currently almost 50 percent. Savings is one reason the Chinese economy is growing far faster than the U.S. economy; the U.S. savings rate is close to negative-4 percent, and our economic growth is sputtering.

http://sports.espn.go.com/espn/page2/story?page=easterbrook/080129&sportCat=nfl

If you can, toss that check into the bank (or the secure investment opportunity of your choice). You will be far better served and might be able to help your kids pay off the debt.

If this is bipartisanship, I might like gridlock better.

[Sonny]

How is it called a rebate if it is given to people who did not pay any taxes? What exactly are they rebating?

[LaxRef]

The idea that we can fix the economy if we'd just spend more is so asinine I can't believe it.

Maybe fix the economy by:

1) Improving education so we can produce more and so we can get more people in productive jobs and fewer people in prison?

2) Not wasting billions on a war started under false pretenses?

3) Supporting research into ways to cut our dependence on foreign oil (see 2), which would at the same time improve our ability to export technology instead of importing it and cut carbon emissions?

Nope. Just everybody get out there and spend, spend, spend, and everything will be alright!

[Gvlax]

i like how news like this is on ESPN's website...

[Dan Wishengrad]

Cliff, Cliff, Cliff... don't go starting to act like a "responsible conservative" and deficit hawk on us! This is not how your GOP wins elections.

Bush et al has made us all see the light -- deficits don't matter anymore. Spend billions on fighting wars and simultaneously push a tax cut. Pour billions into reconstructing the Gulf region after Katrina, but hand out tax cuts with the other hand. Push a $150 billion stimulus package, and hand out more tax cuts. The answer to everything is tax cuts, tax cuts, and more tax cuts! Tax cuts when we have a budget surplus, more tax cuts when we have a record deficit. Tax cuts in a bull market, and more tax cuts in a bear market. There are no ills in society that can't be cured by big tax cuts, especially those that favor the richest Americans, who will bestow the rest of us with trickle-down goodies.

Be sure to villfy all Democrats while you're at it, and say (as Romney did last night) that we Liberals want to raise your taxes. Say it often enough, and loud enough, and everyone will believe it is the Gospel truth.

[Jolly Roger]

A big sceen in every household will cure all economic ills.

Not quite as inspiring "A chicken in every pot and a car in every garage"
– Herbert Hoover

[Sonny]

Be sure to villfy all Democrats while you're at it, and say (as Romney did last night) that we Liberals want to raise your taxes. Say it often enough, and loud enough, and everyone will believe it is the Gospel truth.

Are you saying that BO or Billary won't raise taxes? They have both been on the record to state they will repeal the tax cuts which raises our taxes Wish.

[BucLax13]

maybe we should cut spending

[Dan Wishengrad]

Be sure to villfy all Democrats while you're at it, and say (as Romney did last night) that we Liberals want to raise your taxes. Say it often enough, and loud enough, and everyone will believe it is the Gospel truth.

Are you saying that BO or Billary won't raise taxes? They have both been on the record to state they will repeal the tax cuts which raises our taxes Wish.

I am saying that it is a base cannard, Sonny, to say that Dems WANT to raise taxes. It used to be that Republicans were the fiscally responsible party, the ones who rightly argued that you can't just throw money at problems and create lots of new expensive, federal bureaucracies to solve all of society's ills. We Dems have gotten that message loud and clear. But the Democrats have become the honest-brokers these days, it is our side that says if you want to spend like drunken sailors on leave (or Bush in the White House with a GOP-controlled congress) you have to figure out a way to PAY for it.

Taxes are a necessary evil for living in a democratic republic like ours. If we fight a war, sacrifice is always required, or always was in the past when we had responsible leaders in Washington. You can't have your cake and eat it too. Repealing some tax cuts that favor the wealthiest Americans to pay for the war in Iraq is a responsible start, unlike simply passing on the costs to future generations. One side is telling the truth. The other side is propagating a continued lie and leading our nation down a path of certain fiscal ruin...

[Ravaging Beast]

maybe we should cut spending?

Cut spending...raise taxes...or do both.

[BucLax13]

So all I have to do is sign this rebate (courtesy check) and then I can cash it now for use (pay interest on credit card bills, pay rising gas costs, pay for 1/16 semester tuition or buy more stuff I don't need in form of courtesy check) and you will bill me later(deficit-> Chinese courtesy check)... brilliant (stupid)... I don't see how this can fail (this is going to fail horribly)... it is the perfect plan (for a deeper deficit, government having less ability to prevent large scale recession, and inflation out the...)

it is a sad day when voting democrat is the fiscally sound idea

http://news.yahoo.com/s/afp/20080130/pl_afp/germanyuseconomygreenspan

[Beta]

So when/how do we get this "rebate"?

[Zamboni_Driver]

One side is telling the truth. The other side is propagating a continued lie and leading our nation down a path of certain fiscal ruin...

They are both telling the truth and both leading us down a path of certain fiscal ruin. When you look at each side's approach they would both work and get us out of financial ruin if they ran for 20-40 years un-interrupted - thus both are telling the truth.

However, when we keep switching who is in charge and thus approach, they spend considerable time and money resetting the system. Every time we reset the deficit builds - and thus they are both leading down a bad path.

[laxfan25]

Not really true, Zamboni. We were actually in a surplus at the end of the Clinton administration. It's kind of funny, but the GOP likes to present the image of fiscal conservatism, but take a look at some of the facts regarding the federal debt in relation to presidential terms.

http://en.wikipedia.org/wiki/National_d ... tial_terms

Lots of interesting numbers. Every Republican's favorite poster child - Ronald Reagan - sent federal spending skyrocketing through the 80's, with a huge increase in the debt.

Some numbers that summarize things - from 1978 to 2005:

Under Democratic administrations - Increase in federal spending - +9.9% Increase in federal debt - 4.2%.
Under Republican administrations - Increase in federal spending - +12.3% Increase in national debt - 36..6%

So who are the free-spending credit-card bingers, while harping about the tax-and-spend opposition?

[Adam Gamradt]

Interesting subject.

A couple of points here, first, the economy isn't broken.

It's been mismanaged, and we've allowed, even encouraged people to abuse the system. The mortgage crisis is a self inflicted wound. Many people were paid money up front to take out mortgages worth more than the house they bought. I heard one women on NPR complaining about the loan she took out "well it was fine as long as the value kept going up, now I'm just not going to pay it."

And in reality, why would she? Her credit might get borked, but many people would trade their credit for 30 grand.

The system failed with respect to home loans, in doing so, failed to enforce reasonable economic policy. We really needed to take the incentive out of speculative home purchases, otherwise known as flipping. These loans were packaged up, and sold on down the line, each sale abstracting the problem even further. Additionally, each sale moved the accountability further away from the people who took advantage of the lax enforcement of sound economic policy. But hey, it's a supposedly free market, so now we're getting what's coming to us. I would consider arguments based on taking our medicine now, rather than potentially compounding the problem, as I think many of you are arguing, some more successfully than others.

Second, the current crop of leaders have allowed corporate "America" to avoid paying their fair share of taxes, and have tipped the scales of justice too far toward corporate entities who fund their campaigns. Additionally, by giving corporations who hide their profits off shore a temporary hiatus from the IRS, we've allowed many companies to get this money back in to their coffers without paying taxes. This link is a little out of date, but there are some interesting graphs that show how corporations have become increasingly deft at avoiding the IRS over the last fifty years.

http://www.cbpp.org/10-16-03tax.htm

Third, Bernake doesn't appear to be as capable of running the Federal Reserve as deftly as Greenspan. Granted he was doing pretty well until recently, when he indicated the mortgage crisis was "contained". Unless he meant contained on this planet, he's now walking a rosy yet dangerous line. Now he's trying to get ahead of the problem by lower rates rapidly, we'll see how that turns out. I know it's motivating me to keep less liquidity, and put more money in the stock market. Of course, I'm a small fish, and am not overly concerned with what the market is doing short term.

And lastly, I'm not sure if the tax "rebate" is a good thing or a bad thing, but we'll know eventually. I know the last one did have an impact, and created a quicker end to the recession. Keep in mind the recession was already ending when the checks were sent out. I did find it interesting to see what people spent their money on. I think health care, clothes, food, and eye glasses were high up on the list.

What will I do when I get my rebate? Like any good American, I've already spent it!

The question of taxes, in my opinion, boils down to our we spending our money wisely or not. Given I'm from Minnesota, and we've not been able to maintain our roads and bridges for the last ten years, I'm comfortable stating unequivocally that we are not spending our money wisely. I don't think taxes should be lower than they are, but I know we could use better fiscal leadership across the board, so that our money isn't wasted on perpetuating the same stagnant ideas. For example, I'm comfortable not ever giving tax breaks for baseball stadiums, and wonder why we can't manage to elect leaders who respect their duty to serve ALL PEOPLE, not just the wealthy ones.

Ok, my lunch rant is over. I'm off to create some new documentation, all at no cost to you, the American Taxpayer!