Lars Larson on The President’s “Economic Stimulus” package

I love this President but I don’t like his “Economic Stimulus” package.

You know that I like President Bush. I voted for him twice. I even agree with most of his policies. But, this “Economic Stimulus” package that he just announced makes no sense to me. The idea of borrowing $150 billion, that’s borrowing, not cutting federal programs, not dipping into our savings accounts, just borrowing the money. Print more of it and then sending it out.

$100 billion to individuals is the estimate. If congress goes along with the President’s plan, another $50 billion to business. Why, I don’t see how that really simulates America’s economy at all. Sure, there will be more spending short term. There will also be more debt. That doesn’t make any sense to me. I think it’s just bad medicine.

If the President’s intending just to drop this in the next President’s lap, this may fit that goal. But, it doesn’t do the good for America the President says it will.

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Posted by at 09:00 | Posted in Measure 37 | 17 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Jerry

    It would be a far better stimulus idea to make the Bush tax cuts permanent.

    • CRAWDUDE

      I agree 100%!

  • Margaret Goodwin

    There are so many things wrong with this “economic stimulus package,” I don’t even know where to begin. While $150 billion dollars seems like an awful lot of money (and it _is_!!), this is actually the lowball pitch. The entire cost of the stimulus package is a whole lot more than that. The $150 billion dollar figure only includes the actual rebates — it doesn’t include the interest incurred by borrowing the money or the overhead involved in distributing the checks, let alone the costs associated with the rest of the stimulus package. (Yes, there is more to this ill-conceived package than just rebates…)

    The estimated overhead expenses for sending out the kicker checks in Oregon (not including the value of the checks themselves) is $23 million. Oregon’s population is about 3 million people. The U.S. population is about 300 million people. So the overhead alone at the federal level is bound to run into the billions. Sure, a few extra billion here or there may seem trivial in comparison to $150 billion, but how many people actually realize how much money even _one billion dollars_ really is? It’s mind-numbing to even think about.

    And we haven’t even mentioned the long-term costs of the FHA refinancing all those defaulted subprime morrgages that are likely to default again. A lot of people missed that part of the economic stimulus package because it didn’t get the fanfare the rebates did. So here’s the scoop. To encourage even more irresponsible borrowing on the part of people with bad credit who have already overextended themselve to the point of defaulting on their mortgages, the economic stimulus package has doubled the limits on Fannie Mae and Freddie Mac loans. The maximum is now _$729.750_. (Bet your house didn’t cost that much!) But wait — there’s more! Many people who are facing foreclosure on their subprime mortgages are now eligible for FHA refinancing, backed by the full faith and credit of the U.S. taxpayer…

    And, if you want to know what I _really_ think, visit my blog at http://notyourdaddy.wordpress.com/2008/01/25/whats-wrong-with-this-picture

    • dean

      Margaret…I agree with you the “stimulus” package is poorly conceived. But we dug ourselves a deep hole with unregulated subprime lending, a trillion dollar war on borrowed money from China, and other misguided policies that now threaten to take down the entire banking system. That is a big risk to run. So droping suitcases of cash on the people is a sign of how desperate things look from inside the Fed and White House.

    • CRAWDUDE

      You’re kinding? $730,000! Most will default again whether they get a fixed rate or not. When they raised it to $417,000 it didn’t help much because many of those who financed at subprime were financially irresponsible to begin with.

      Many of those people used the Equity in their home to finance a lifestyle that they couldn’t afford to live. E.G. 2 Quads, 2 SUV’s a boat, vacations every year, more house than they needed ( things responsible people save for or go without). At $417,000 they couldn’t refi and lost most of it, as they should due to financial irresponsibility. At $730,000 they will be able to Re-fi but it will only prolong the same from happening because they will still be financially irresponsible!

      Letting them fail will allow them to learn why they failed which will hopefully teach them how to become responsible. Bailing them out keeps them at status quo at best………merely prolonging their misery and creating an even greater national debt.

  • devietro

    I agree its a bad econ decision to borrow money to stimulate the economy. However this money will pay off the last of my Credit Card which will be good. So all in all, good for me bad for the overall economy.

    I know I will be attacked for it, but I have to say that on this one I need to look out for myself.

    • CRAWDUDE

      Looking out for yourself is sadly all you can do nowadays……..this $600 is the last of what I need for replacement windows in the front of my house.

  • rinowatch

    Borrowing the money (China) to “stimulate” the USA economy by spending on goods made where, in China, creates a Winner. China!

    As my legal immigrant, WW1 grandpa used to say —“Never feed the enemy”….

    C-Dude, have you factored in the Fed & State taxes you’ll owe on that $600? Fewer windows…..

    • CRAWDUDE

      Yes, I did…………cheaper windows;)

  • Gullyborg

    Call me crazy here, but I thought we fiscal conservatives believed in the people keeping more of their tax money. I look forward to getting some more of the money my wife and I had taken away from us against our will by the government back.

    Could this be a “better” package if the government also cut spending and eliminated government waste? Absolutely. Would making the temporary tax cuts permanent also be a big improvement? You bet. But neither one is going to happen, especially with the current Congress. So give me my money back now and I’ll be happy enough. Then vote in a fiscally conservative Congress to work with President Romney to make the other changes.

    • dean

      Gully…they are not “giving you your money back.” They are borowing money from the Chinese, giving that to you hoping you will buy something, and then will be paying back the Chinese with interest from your taxes in the future.

      “Your” money was spent in Iraq. No wait…your “fiscal conservatives” borrowed THAT money from China as well.

      • CRAWDUDE

        Thats the same thing they said about the Japanese last decade…….do liberals have a problem with Asians?

      • Gullyborg

        Your logic is circular and makes no sense. It is no different from lowering taxes. The problem is still too much spending on crap, not that they aren’t taking enough money from us. The “borrowing from China” crap is just a red herring. Consider this hypo:

        Right now, say government takes an average of $11,000 per taxpayer and spends an average of $12,000 per taxpayer, pushing us farther into debt. At the same time, the economy is lagging. Some experts want a tax cut to stimulate the economy. Others suggest keeping taxes the same, but giving people checks to stimulate the economy. Here are two options:

        Scenario A)

        Government takes $10,000 from each taxpayer (average). Government spends $12,000 per taxpayer (average). Government racks up bigger debt. Growth in debt = $2,000 per taxpayer (average).

        Scenario B)

        Government takes $11,000 from each taxpayer (average). Government spends $12,000 per taxpayer (average). Government also gives $1,000 back to each taxpayer (average). Government racks up bigger debt. Growth in debt = $2,000 per taxpayer (average).

        WHAT IS THE DIFFERENCE?

        The only REAL difference is that one is tax cut and the other is a rebate.

        Now, anyone who says we need tax cuts should be supporting this plan. No, it is not as good in the long term as cutting taxes – a tax cut would, in theory, be in effect every year until modified again. This rebate is a one shot deal. But a one shot deal is better than a NO shot deal. It is better than the temporary tax cuts under Bush being allowed to lapse back to higher rates.

        Yes, there is deficit. So what? A stronger economy results in more revenue generation. Combine that with cuts in wasteful spending, and we go back into the black. Make the tax cuts permanent, and then go even further by cutting corporate taxes and death taxes. And by all means, use the rebate RIGHT NOW to kickstart us, since permanent tax cuts won’t have an impact right away.

        Seriously, I can’t believe ANYONE who supports low taxes for economic growth is opposed to this. Taking money away from the government and giving it back to the people is the CORNERSTONE of free market capitalist economics and the heart and soul of the Republican Party.

      • Gullyborg

        Give us a rebate AND a tax cut. Give us as much of OUR money back as possible.

    • CRAWDUDE

      Give us a tax cut not a check, I’ll be happier with a $600 tax credit that can be used every year.

      • NotYourDaddy

        Agreed. There are several problems with cutting a check, rather than cutting taxes. To list a few: borrowing the money from China and taking the interest out of your future taxes, plus the money it costs to actually print and mail out the checks, plus the fact that you’ll just have to send part of it back next year with your 2008 taxes. It’s terribly inefficient, and wastes a _lot_ of money in useless overhead — money that you end up paying in higher taxes in the future.

        The same Democrats who are eager to support this rebate, because it’s great PR and a very visible way of making it _look_ like they’re giving back money to the taxpayers, are opposing the renewal of the Bush tax cuts! So the government gets to keep more of your money, while making a big show of giving you a little bit back, even though that little bit you get back is all going come right back out of your own pocket in the long run.

        A rebate is not the same as a tax cut, or even a tax credit. It’s a PR gimmick. How about if I give you a dollar today, and you only have to pay me back ten cents a month for the next two years? (It’s a bright shiny dollar!)

        • dean

          CD…I can’t speak for all liberals, but personally the answer is no, I have no particular problem with Asians.

          If we were borrowing the money from the Saudis or the Brits or Germans it would still be a stupid economic policy. Why does the so called richest nation in the world need to borrow from anyone?We are supposed to be in a position to lend the money and collect the interest others pay. When America was a developing economy we were borrowers who took the money, built infrastructure, increased productivity, and paid the money back all the richer. Now we are borrowing the money to spend it on stuff made by others while our infrastructure goes to pot. If that doesn’t make you nervous you flunked Econ 101.

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