Stimulus package and the economy

[Kevin_H.]

Ok I will be the first to admit that I don't squat about the economy

But here's my question, it seems that both sides of the isle are now pushing some kind of package to boost the ever falling economy. The package is looking something like $800 for a single and $1,600 for a family, but doesn't this just prolong the inevitable?

I mean the economy must have a down turn sometime, doesn't it?
Shouldn't we just let it go ahead and correct... or can we really stop it.

[Greg]

Ok I will be the first to admit that I don't squat about the economy

But here's my question, it seems that both sides of the isle are now pushing some kind of package to boost the ever falling economy. The package is looking something like $800 for a single and $1,600 for a family, but doesn't this just prolong the inevitable?

I mean the economy must have a down turn sometime, doesn't it?
Shouldn't we just let it go ahead and correct... or can we really stop it.

Yes, many books have been written about how government interference in attempting to put off inevitable dips in the economy actually makes things worse in the long term.

Of course, its an election year and those running have no problem throwing money at the problem, whether it actually helps or hinders, in order to squeeze out a few more votes, give a few more speeches about their plans to "fix the economy".

What you don't mention is that none of the stimulus plans proposed are actually paid for (by either spending cuts, or additional taxes) so in essence whatever checks that get sent out in July are going to be put on the backs of our kids and grand kids to eventually pay for. I hope every American who accepts/spends that $800 or $1600 is comfortable with that.

Of course, this kind of thinking passes as "business as usual" in the halls of our the federal government these days, from both major parties.

Greg

[Ron Wenrich]

It will boost the economy in the short term.  I think its something like $145 billion.  Many people willjust use it to pay for some current bills, such as Christmas.  I won't be spending mine, since I don't live on credit, and there isn't a whole lot that I need.

The "rebates" would put cash in a lot of hands with the apparent return being a higher employment rate.  But, the housing economy is in the dumper.  It won't be coming out anytime soon.  People will act a lot more conservative this time around.  They won't go on a spending spree, as the government figures they will.  The rebates would end up reducing inventories, not necessarily increase employment, except in the office issuing those checks.  Only sustained buying would boost employment.

Our economy is something on the order of $13-14 trillion.  That "stimulus" works out to the order of 1.1% or so of the Gross Domestic Product.  I don't see how that's going to really shake things up.  Its just taking things from one pocket and put into another.  There's a deficit someplace. 

[Warbird]

Assuming this whole deal goes through, the Mrs & I will use ours to pay off more debt so we can start our family earlier than we'd planned. 

[beenthere]

It's our money, and I'd rather spend it than let the Gov't waste it. And they do waste it, IMO.

I'll prolly buy something with it, even tho it might just be a Roxburger. That puts that $$ back into the local economy, and supports a local business, which hires a local person to work.   Hey, maybe there is something to this.   8)

[Fla._Deadheader]

  Permanently lay off 1/3 of the govt. and cancel MOST of the overlapping stoopid laws, and penalties. Put the USA back to work.  : :

[Handy Andy]

  FDH has it right, only I'd lay off 2/3.  If you want to learn about economics, subscribe to mises.org.  Basically, government spending equals the burning of capital.

[Mooseherder]

I worked exactly 3 months for the gobermint this past year.
You think they may wanta send some back my way ???
What would they do without me. :D
Heard on a Radio show they spent enough this year for everyone to pay in 10 months of your earnings.

[Jeff]

We could certainly use it. If we were caught up on stuff when it came, and didnt haveto use it for bills, I would use it to get Tammy a small embroidery sewing machine she has been wanting for years. The only way to have the tax refund help the economy in my view isto put it back into it.

[low_48]

Think they will borrow the money from China to do this, or maybe the Saudi's? Where is the money coming from, didn't any of their Mothers teach them to only spend when they have the money? With something like $5 billion a month going to Iraq, good jobs leaving by the 10's of thousands, $1600 a couple just doesn't seem like too big of a band aid.

[Furby]

They said it would have to happen each quarter in order to have any effect and I'm in the camp that belives that to be the case.
$800 is only $66 a month for a year minus the adjustment to your tax return next year.

[Kevin_H.]

I know that I have places that the money can go, but if we have to hit bottom before any long term growth can happen then we should just let it ride.

I really think this goes back to the tech bubble, when the tech bubble burst, it seems like the goverment lowered interest rates to promote the housing market and now since that is in the crapper, they want to continue to prop up the economy.
sure a recession will hurt, but just like with bibbyman, had he gotten that tooth taken care of sooner, the pain would have been much less. 

If it is going to hurt no matter what we do, then lets just get it over with now.

[thedeeredude]

Get rid of the IRS ;D  That would save money.  Most of the taxes levied on us commoners(In da US that is, don't know what Canada is like) are unconstitutional anyway.  Less taxes and restrictions, better economy. 

[Norm]

Kevin was right on, the feds lowered interest to stave off the last recession and we got a housing bubble. Let the wall streeters go broke that made billions off the sub mortgages instead of bailing them out with low interest. Think I'm insensitive to the folks that got caught in the housing? I'm paying a mortgage for a son that thought housing would only go up in price and that he'd not have any problems selling at a profit. A year later it's still for sale and he'd be in foreclosure if not for our help.

Prices of commodities are sky high right now. I'd rather have a recession than go back to the economics of the 70's when inflation was so high. Some short term pain is much better than another federal bureaucracy bailout that is only a band aid.

[treenail]

I'm not sure how the rebates are going to affect us in the long run, as our problems as a nation are getting pretty large. Having just gone through months of listening to politicians here for the New Hampshire presidential primary, as they make hollow promises, one can understand why things have gotten out of hand. Most of them have been involved in producing the economy that we now have inherited to collect votes. If they would get off the campaign trail and back to Congress to do something real, instead of talk, we might actually get off the oil dependency etc. Time to produce a new self sufficient economy that produces new jobs and real long term financial security.

[submarinesailor]

I agree completely with Norm about letting the chips fall when it comes to the mortgage mess.

But, let's talk about government workers.  I don't know about other agencies, but at the 2 DOD agencies I have worked at, I have ever had a job when I could just sit back and do nothing.  I stuff my head into my computer at 0530 and don't come out until 3:00PM.  The only thing I look at other than government stuff is the Forestry Forum-on my breaks. I don't know if I told you guys or not, but in accordance with the union requirement, we were put on notice that start 1 January to 30 June we could be put on mandatory overtime.  Up to 50 hours per week.  Last year, the natural gas division at the Defense Energy Support Center, on a budget of about 5 million (training, travel and salary), we saved the DOD (and the tax payers) just short of 55 million by buying natural gas in bulk.  So please be very careful when talking about government employees.  And yes, there are some, maybe many, government employees that need to go.  Most of the ones I know are busting their ass very single day.

OK, I'm down off my soap box now.

Bruce

[Grawulf]

Oooh! Oooh! Let me vent here for a minute too! We have a small contractors business - two partners and one employee (my wife who does the books). Workmans' comp bill is $1. 96 per quarter.........until this year. Minumum or $50 per half now  - time for a tax revolt!  >:(  I'm ready to dump the tea into the bay!  :

[snowman]

The economy is just fine but unfortunately when it comes to the economy, perception is reality. If everyone thinks the economy is bad, it goes bad. The dems running for pres and the liberal media have done a fine job brainwashing America and have succedded in dragging the economy down.The housing bubble had to end, it was a nice ride and alot of people got rich but it couldn't go on forever. Fuel on the other hand is a problem. We won't drill our own oil in anwr, the gulf of mex, calif coast or florida coast.Result is the oil producers of the world have us over a barrel, an oil barrel and are sticking it to us bigtime.We have it coming and I actually enjoy hearing people in big SUVs with a bumper sticker that says stop anwr , squeel like stuck pigs over the price of a fillup. :D

[ARKANSAWYER]

  What we need is manufactoring jobs.  So many people work but make nothing.  The information age is killing us.  Farmers are paid to let land sit idle.  People are paid to not work becasue they are over weight.  I know for a fact that in the area that I live in that 20% are on disability of some kind.  I went through 5 men in the last two weeks trying to find someone to work.  Companys like Ford pay the CEO $150,000,000 plus a year to put his name on a door.  He does no real work and produces nothing.  Most large Corps have not made a profit on all 4 quarters in years.  They are only in business because they can sell stock and split it.  I used to have stock and every year we got a dividen check or could purchase stock.  Wife owns stock and I see no dividen checks but every 5 years or so they will split.  Unions have helped workers get just pay but then have also priced people out of work.  I was a UAW member one time and saw how they can cost you a good job.
  They should pull the troops out of Iraq and Afganistan and and quite paying all that money out and trying to fix them people.  Take care of the home front first.  We pay Pakastan millions every month to just be able to fly over and for help with terriorest.  They have not been much help.
  I figure the Arabs will buy out the morgage companys and credit cards companys and then they will have us by the "godads" and over the barrel at the same time.  Government will keep it up till the Stock Market Crash of the 1920's will look like a cake walk compaired to what we got comming.

[CLL]

I think its time we stopped sending money to all these other countries, and take care of our own. Why send people money to people that don't even like you. STOP all the over runs charges on products, if you tell me you will build me a house for $100,000, don't think I'm going to pay for $125,000 due to your stupidity, not going to happen. I could stop illegal border crossings almost completely in two weeks. The government is just out of hand, just like our highway departments here, 5 man crew, 1 working, 4 watching. To many chiefs not enough indians.

[tcsmpsi]

I really don't know what folks expect.

Just using some reasonable numbers/percentages, just take a logical look at the 'economy'.

Let's say 35-40 yrs ago, the job that paid $2.50 an hr, today pays $7.50 an hour (there are some jobs I'm aware of then/now in which those numbers are true).  That is an increase of 300%.  Using one of our most indicative expenditures, gasoline, 35-40 yrs ago let's give it .50 per gal.   Today, between gasoline and diesel (many more vehicles using it in this country today), we can easily and reasonably say that it costs $3.00 a gal.  That is an expenditure increase of 600%.   I believe that, overall, we can easily and reasonably that our 'average person' tax increase is at least 200% more than it was 35-40 yrs ago (more things taxable/government fees/registrations/etc., etc).

I know what I paid for utilities, etc. 35-40 yrs ago, and it falls pretty much in line with fuel increases.

So, in a society, over a 35-40 yr period, the average person's income has risen 300%, while their major expenditures have risen around twice that amount.  So, for all practical purpose, the average person's wages are basically half of what they were in 1970.  The 'mystery' of folks going to credit to have things (things are offered, this is America, the average, hard-working person should be able to have them, right?).  In many cases, just basic necessary things.  

Though wage difference may have a significant bearing on some businesses moving and/or closing, the tremendous tax burden on a business here is no insignificant factor.   Taxes, fees, permits, matching social security, benefits, workmans comp, etc.

35-40 yrs ago, more taxes levied and collected were actually utilized in this country than they are today.  We're spread out all over the world attempting to take care of other people's business, while ours is being sorely forgotten.

Though the 'government' may boast some sort of 'tax-cut', it will never be.  Government has become a bankrupt business.  Whatever littlle dollop might be 'rebated' or 'cut', will be made up for in some manner.  

In strictly a business sense, a merger or hostile takeover is inevitable.

More and more folks are maxing out their credit abilities, while the credit furninishing entities are, instead of being reasonable stewards, cutting their throats while raping them.

So, how can consumer spending possibly increase?  


I suppose I always just took too simple a view of 'economics'.   I always figured that with those in government having their own agendas, and the Public always wailing and wanting government to provide and control every little aspect of their lives, that one day the cost of that would be more than was possible to squeeze from the taxpayer.  Just a matter of time.  I believe history is full of similar instances.

The closer that moment comes, the more it will effect every aspect of the Public's availability to spend, for there won't be much to spend.

Though I have not sit down and figured just exactly how much I pay in some sort of government tax/regulation every day, just a quick overview is indicative of that very thing.  

[badpenny]

   I hope that a "rebate check" never does appear in my mailbox or bank account. I don't need it. nor do I want it.  I'm guessing here, but that $ will probably be taken off any fed income tax refund next year. It has been my experience that "the government" only gives a person something that has already been taken away.
    I don't have a solution yet, but most financial problems of the magnitude this country has at the moment have been historically solved by recession/depression or war.  IMHO, we should bring all our overseas troops home, and all our overseas spending should stop. But this also may lead to recession/depression world wide, and possibly war as well.  The ultimate solution to America's financial problem is going to hurt someone/everyone somewhere in some way or another. And it's not going to be pretty or instant.

[DanG]

I think the theory behind the tax cuts or rebates is that the money will come back to the Gov't anyway.  The money isn't really being spent, as in "used up", but is just being circulated.  Every time a dollar is circulated, somebody pays a tax on it.  If you could trace a single dollar as it circulates, you would find that the Gov't, at some level, recover's an entire dollar in an amazingly short time.  Money given back to the people is not only good for business, it is good business for the Gov't.

[thedeeredude]

The government is just out of hand, just like our highway departments here, 5 man crew, 1 working, 4 watching. To many chiefs not enough indians.

Where I work is union and I'm not allowed to work outside of my job class.  I can't drive a truck with a snowplow to clear the roads, but I can drive that truck to haul wood debris even if the plow is still attached as long as I'm not clearing the road.  The highway departments are probably under AFSCME like I am.  One group of workers can do one thing but not another but another group can do both things.  Ain't it great.  We could get a lot more done if people would quit bickering about who can get what done or who's allowed to do this or that.  But if you try to do more than you're supposed to you're made fun of and scorned.

[Larry]

All this gloom and doom is depressing me.  Anybody know bright spots?

I'll throw out a few that I've noticed.

Thirty year fixed rate mortgages are flirting with near record lows along with the points.  A great opportunity for first time buyers or somebody looking to refinance...and the banks are loaning...to those who can keep there finances in order.  I can remember payments associated with double digit mortgage rates in the 80's and it kept a lot of family's out of the housing market.

A glut of houses on the market at reasonable prices...again a golden opportunity for the first time buyer.

Just over 3 months ago the DJIA hit a record high.  Every sign from the economy was screaming SELL.  Now were in a market that might be a bargain hunters dream...just figure out exactly when to buy.

Kathy's new Honda CRV gets better than twice the mileage of her new at the time 1982 S-10 Blazer.  Far less maintenance expense...and it leaves fewer parts strewn along the roadside. >:( >:(

And Walmart had a 32" TV for less than $300 the other day...wonder how much one of those suckers would have cost me 30 years ago?