Friday, January 25, 2008

Shabbat Shalom 18 Shvat 5768

Stimulus Package Reality Check
Will it benefit our economy?

By now you have heard that President Bush and the Congressional Democrats have come to an agreement regarding an economic stimulus package. At the moment it appears that all taxpayers will receive a check for $600 or up to $1200 per couple and $300 for each child. This tax rebate as it is being labeled, will be given to individuals making $75k or less and couples whose combined income is below $150 grand.

So will this work? Should it be done? Is it necessary? The answer is no, yes and moot.

The amounts being discussed will have a temporary boost to the economy, but then we will see an immediate downward turn that may have worse ramifications. An effective stimulus would be an immediate and permanent tax deduction across the board or at least one that greatly impacts the middle class, families making under 200k a year. This will energize the economy and have a long term impact as Americans will take more money home in their paychecks.

Even though I believe the rebates will have minimal and temporary benefits at best, I still support the idea of Uncle Sam sending Americans a check. The fact is that it is our money. Americans are grossly over-taxed, so any time money can be taken away from the bureaucrats in Washington and given back to wage earners, it's not only a positive, but simply the right thing to do.

Right now we are hearing praise by politicians on both sides of the aisle because the White House and Congress came together to create this bi-partisan relief. Lets take a step back and think about the compromise that came out of Washington. President Bush originally wanted $800 per taxpayer with an undetermined amount for children. Democrats wanted a mere $300 bucks per adult and an increase in food stamps and unemployment benefits.

Neither plan would be the Holy Grail, but the Presidents would of had a better impact on the economy, still temporary, while the Democrats would of had no affect and simply be an entitlement program increase. The unemployment benefits extension sounds good to those who have lost their jobs, but with a 5% unemployment rate the economic impact would be non-existent. So because Democrats can't stand giving money back to the people, compromise simply weakened the stimulus.

My Libertarian friends will be angry at me for saying this, but I have no problem with extending unemployment benefits. The recipients are people who have been working and have lost their job recently. They have paid taxes and have overpaid like everyone else. This is how they can get back money the government has exploited from them. These aren't welfare cases and once again it is our money.

As far as any stimulus package being necessary to begin with is a moot point. The government can only do one thing to help the economy...get out of the way. Let the free market do it's magic.

Current economic woes are fueled by the housing market, which led to the credit crunch. At the same time high fuel costs are also hurting average Americans.

The housing crisis is not hard to figure out. The current situation is part of a cycle that must be completed before improved. For too long the market was riding strong and we are seeing the cooling effect, which was inevitable as your brilliant blogger began saying over 5 years ago. The sub-prime lending woes are not the result of bank fraud and scams like John Edwards claims. People got caught up in the housing hype a few years back and bought homes they couldn't afford with low interest arm loans. Guess what happened. Don't blame banks for people thinking emotionally not rationally. What banks can be blamed for is ignoring the first rule of loaning money. Don't grant loans to people who can't afford them. That's their mistake and many of them are paying for it today.

As far as fuel prices, get used to it. The demand out of China and India is driving the high prices, not corporate greed as our friends on the left claim. If we began drilling in Anwr back in 1996, we would be using that fuel today, paying cheaper prices at the pump and not pumping money into economies that support Terrorism. Thank you Bill Clinton and John McCain.

Democrats must bow to Obama
The Party platform requires it

Paulies Point is calling for Sen. Hillary Clinton and John Edwards to immediately end their bids for the White House because as Democrats they are required too. Illinois Senator Barack Obama is an African American. Clinton and Edwards are white Christians, so do to the Democratic Party support of affirmative action, Obama as the only black candidate is automatically the Party nomination.

There is some that say Clinton as a female also gets special treatment. That is true. However unless she was Hispanic her gender would not trump the race priority of Obama. Therefore congratulations is in order for Sen. Obama and his family for his nomination.

This blog asks that the Senator from New York and ambulance chaser from North Carolina please submit their resignation letters to Party chairman, Howard Dean by the conclusion of business today.



At 1/25/2008 12:44 PM , Anonymous DAVO said...

Temporarily eliminate the FICA tax until the economy regains some strength. Raise (not lower) interest rates to combat the obvious inflationary pressures we are feeling.

At 1/25/2008 1:43 PM , Anonymous Anonymous said...

Do not tax the first $30,000 a person makes, eliminate child tax and earned income tax credits.

A married couple w/ 2 children making $60,000 combined would pay $0 in tax. Cuurent scheme is 8,217 - 2,000 child credit = 6,772 in tax.

Married couple combined making $40,000 w/ 2 children would pay 0 tax and under the old scheme would pay 5,217.

At 1/25/2008 1:49 PM , Anonymous Anonymous said...

Or we could eliminate the concept of exemptions and just multiply the number of qualifying people in the house (mom, dad & 2 kids) times the tax table.

So, if the first 7825 of tax free and for a family of 4 it would grow to 31,300. The 15% bracket would expand from it's current 63,700 max to 127,400.

So.. that $60k married couple with 2 kids would owe $4,305 in tax vs. $8,217 - saving $3,912.

You'd have to cap it at 4 though or Fortune 500 CEOs would have 50 kids each.

At 1/25/2008 1:50 PM , Anonymous Lou said...

How about just cutting spending?

At 1/25/2008 3:32 PM , Blogger Paulie said...

The truth is that these are all good ideas because they are all an improvement of the current system. I especially like DAVO's suggestion of eliminating FICA and it goes without saying Lou's suggestion of cutting spending.

As far as Interest rates goes,I see DAVO's point, but I am hopeful that the current cuts will help those who need to switch to a fixed rate mortgage will have an easier time affording it. Not t o mention lower creditcard rates since people are way overextended.

At 1/29/2008 10:51 AM , Blogger Jeff Morton said...

what is most ironic about this whole proposal is this....We will be borrowing against our debt in order to stimulate our debt so that it MIGHT stimulate our economy. Our economy is based on our debt, not our productivity! We are a debtor nation. I am confused?


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