Economic Stimulus Package
Posted by Mike Sylvester - 2/18/08 @ 9:02 am - Filed Under National Politics
The “Economic Stimulus Package” will require many posts to explain and analyze.
There has been much talk in the main stream media about the “Economic Stimulus Package” that was signed into law last week. It is amazing to me that the “Economic Stimulus Package” was created quickly and with broad bi-partisan support. The vast majority of elected officials in Congress agree that this “Economic Stimulus Package” will both “jump start” the economy and that it is sound fiscal policy.
I think the only reason this “Economic Stimulus Package” was agreed to so quickly is that 2008 is an election year and Republicans and Democrats are doing their best to give money to voters and hope incumbent politicians will get re-elected.
The ESP is not sound fiscal policy. We are issuing more US Treasury Bonds (Many of which are owned by China and Japan) and sending that money to Americans with the hope that they will immediately spend that money in our economy. There are two basic problems with this:
1. Realize that President Bush signed a similar “rebate package” into law a few years ago that sent “rebate” checks to taxpayers so that those tax payers could inject that money back into the economy. I have looked at the research of several “think tanks” and there is consensus that approximately 21 - 22% of the “rebate checks” a few years ago went straight into the economy to pay for goods and services; the other 78 - 79% went into savings or to pay existing debt. This means that the “ESP” is doomed to fail since the vast majority of the “rebate checks” will not go back into the economy for goods and services.
Household debt has soared in the last few years; I would argue that an even higher percentage of this year’s rebate checks will go to pay household debt or savings!
2. This “ESP” will increase the National Debt by around 160 billion dollars. We are paying current taxpayers and forcing future tax payers to pay the interest and principal of this debt.
I do not understand how anyone who understands economics could possibly think that this “ESP” is sound fiscal policy!
We need some new people in Washington who understand basic economics. We absolutely must stop deficit spending and we must decrease the size of the Federal Government significantly.
Mike Sylvester, CPA
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We’re basically giving everyone a Wal-Mart gift card. How in the world is that going to solve the problem? So the money will get spent but the root problem doesn’t get addressed.
Unbelievable…