[kieran]

**Disclaimer**

I don't want this to become a thread about how the current administration may/may not have caused this downturn in our economy. The situation is as it is and we all agree that it needs help. Let's leave the political bashing out of it. Thanks.

** End Disclaimer**

I was doing some reading today and saw a few articles about how the government may issue rebate checks to citizens to stimulate the economy.

Newsday Article

The article talks about individuals getting at least $300 and potentially up to $800, with up to $1600 for households.

I could see the helping people who are very tight for money right now with all of the different things bringing down our economy, sub-prime mortgages being #1.

I just wanted to see what some people on here though about this situation.

I was planning on using my tax refund for Time Capsule, but this could entice me to move up to the 1TB version. haha.

I should have higher priorities than this, but I don't. oh well.

[thegelding]

how is this paid for?

by my children, my grandchildren?

though i would actually like to see the money spent on iraq going to road projects and bridges and back to lowering our insane national debt...

eh, whatever...we'll keep borrowing until nobody in the world will take our debt, and then we will just either collapse or bomb somebody


maybe i'm just grouchy today

g

[Xaqtly]

Everybody gets $300, in the form of a Tricky Dick fun bill!

[faust]

The plan is crap; its a short term solution to a longer problem. Yeah let's encourage Americans who already spend too much moeny to go on a shopping spree this summer.

And this isn't money the government is giving you, its your own money. Smoke and mirrors, a favorite trick of our government.

Finanical idicators already show rising rates of folks being late on their mortgage, car payents, and credit cards then all this money might do is help them catch up on one bill if that. Then what?


Man I hate our government (all parties) and the lazy Americans who will fall for this gimick.

[Naderfan]

To quote Lewis Black (from The End of the Universe, about the surplus rebate):

"Nobody, NOBODY, got a check for $300 and said, 'Son of a bitch. Free at last. $25 for the house payment, $10 for the car, 50 cents for gas. I'm home free!' $300 only helped remind people how F***ed they were!"

[ghoti]

They expect one third of the people to use the money to pay off debt, one third to put it into savings accounts, and one third to spend it right away. So that means 33 billion of spending in a relatively short time span. Retail makes money, the economic indicator flips from "AMERICA IS DOOMED!!1" to "Sunshine! ", Wall Street starts going crazy, the Dow Jones hits another record high, and all is well.

At least for the few months leading up to the election.

[Moogs]

Stupid idea. More short-term thinking from the geniuses in Washington. In order for the economy to work long-term, *individuals* have to make sacrifices over the long-term. That means higher taxes for some and steady taxes for most, it means taking that disposable income and putting it into a savings account instead of buying your kids an XBox 360 and 27 games to go with it, it means being more practical every time you pull out your wallet, and it means the government being FAR more careful when it pulls out ITS wallet. I'll spare you the gory details there over the last 7 years. The facts are self-evident, and it's not the first time and won't be the last time either. Politicians are spend-happy lying sons-a-bitches generally.

Anything short of that, is shit. Gimmickery, smoke and mirrors.

[Taskiss]

Spending money becomes a habit very quickly. Give someone $300 to spend and they'll end up spending $500 or more.

That said, you have to prime a pump from time to time if you want to get water flowing. Same thing. Oh, and for those that think it won't work? Well, it worked last time. It doesn't mean it's a good idea, but I've learned that when you argue with success it just makes you look stupid.

I guess I'd think it was a good idea if I was hurting for cash though.

[Kickaha]

Unfortunately, we have now trained multiple generations that, when the going gets tough, to ask for help from DC. Press that bar, get a pellet.

There's nothing *but* smoke and mirrors, because that's what people have been trained for.

[faust]

Originally Posted by Moogs Stupid idea. More short-term thinking from the geniuses in Washington. In order for the economy to work long-term, *individuals* have to make sacrifices over the long-term. That means higher taxes for some and steady taxes for most, it means taking that disposable income and putting it into a savings account instead of buying your kids an XBox 360 and 27 games to go with it, it means being more practical every time you pull out your wallet, and it means the government being FAR more careful when it pulls out ITS wallet. I'll spare you the gory details there over the last 7 years. The facts are self-evident, and it's not the first time and won't be the last time either. Politicians are spend-happy lying sons-a-bitches generally. Anything short of that, is shit. Gimmickery, smoke and mirrors.

But why should people save? Rates are low and anything the bank gives you gets reported for income tax purposes.

We need to encourage savings by allowing everyone to put up to 25% of their earnings into tax free savings accounts each year, that might change the tide. Plus more money in the banks means more that is available for making loans for business needs and responsible home ownership.

Politicians are spend-happy lying sons-a-bitches generally --> you forgot short sighted and nasty

[Kickaha]

Originally Posted by faust But why should people save? Rates are low and anything the bank gives you gets reported for income tax purposes. We need to encourage savings by allowing everyone to put up to 25% of their earnings into tax free savings accounts each year, that might change the tide. Plus more money in the banks means more that is available for making loans for business needs and responsible home ownership.

Better yet: eliminate the income tax and replace with a progressive sales tax. Suddenly savings and investment looks a whole lot sweeter.

Politicians are spend-happy lying sons-a-bitches generally --> you forgot short sighted and nasty

I think you just described the general populace.

[faust]

Originally Posted by Taskiss Spending money becomes a habit very quickly. Give someone $300 to spend and they'll end up spending $500 or more. That said, you have to prime a pump from time to time if you want to get water flowing. Same thing. Oh, and for those that think it won't work? Well, it worked last time. It doesn't mean it's a good idea, but I've learned that when you argue with success it just makes you look stupid. I guess I'd think it was a good idea if I was hurting for cash though.

Last time, you mean after we were attacked for the first time in our nation's history? Versus today's problem that is driven by stupid people taking loans they couldn't afford, loans given by even dumber banking officials?

And did it work last time? I bet comsumer spending went up by a lot more that the rebate amount which means folks spent the $300 and put some debt on their credit cards. Debt they are probably still paying $10 a month for now.

[Moogs]

Faust: my answer to your question is, because no matter the incentives, it's always the right thing to do (to save more than you spend on wants). Sure the government could have better incentives or whatever but it boils down to personal responsibility x80,000,000 or however many spending adults are out there in the US.

[Kickaha]

Originally Posted by faust Last time, you mean after we were attacked for the first time in our nation's history?

I think you mean "for the the first time since the 19th century."

It's not like the Canadians burned down the White House or anything.

[Taskiss]

Originally Posted by faust Last time, you mean after we were attacked for the first time in our nation's history?

You're about ... oh, at least several hundred years off. Heck, Pearl Harbor even, if you want to limit the definition of "attacked" to mean an unprovoked act of aggression to the US on our native soil (even though "unprovoked" can be argued ad nauseum).

Even so, the cause of the problem is moot. More are going to suffer if nothing is done. Even those who aren't guilty of any bad monetary policies will suffer, single mothers, those on fixed incomes, etc.

And yes, it'll work. It'll be a shot in the arm and it'll speed recovery. I don't need it, apparently you don't, but I know better than to argue with it, as do most economists. Libertarians are the only ones I see foaming at the mouth about it, and well... that's pretty much standard operating procedure for them anyway.

[faust]

Originally Posted by Taskiss You're about ... oh, at least several hundred years off. Heck, Pearl Harbor even, if you want to limit the definition of "attacked" to mean an unprovoked act of aggression to the US on our native soil (even though "unprovoked" can be argued ad nauseum). Even so, the cause of the problem is moot. More are going to suffer if nothing is done. Even those who aren't guilty of any bad monetary policies will suffer, single mothers, those on fixed incomes, etc. And yes, it'll work. It'll be a shot in the arm and it'll speed recovery. I don't need it, apparently you don't, but I know better than to argue with it, as do most economists. Libertarians are the only ones I see foaming at the mouth about it, and well... that's pretty much standard operating procedure for them anyway.

I meant the continental 48 because I work in research and that's all we care about. And 9/11 was a real attack that had further implicationms than anything in the 1800s did thanks to technology.

This will fix nothing; how many Americans are already drooling over getting this check to buy something 2x - 4x the cost of the rebate?

The right thing to do is to do as little as possibel so that the merket corrects itself. This is an election year joke and a bad one at that.

[faust]

Originally Posted by Moogs Faust: my answer to your question is, because no matter the incentives, it's always the right thing to do (to save more than you spend on wants). Sure the government could have better incentives or whatever but it boils down to personal responsibility x80,000,000 or however many spending adults are out there in the US.

How many folks do the right thing just because its the right thing to do, most need incentives to nudge them the right way.

I'd love to know why I have to pay taxes on my income, my stock gains, and on any chump change I get from my savings. And then when I die someone in my family will get taxed yet again on my money.

[Taskiss]

Originally Posted by faust I meant the continental 48 because I work in research and that's all we care about.

Then read this:
http://en.wikipedia.org/wiki/Balloon_bomb

From late 1944 until early 1945, the Japanese launched over 9,000 of these fire balloons, of which 300 were found or observed in the U.S. Some guesswork gives the total number that made the trip at about 1,000. Despite the high hopes of their designers, the balloons were relatively ineffective as weapons, causing only six deaths and a small amount of damage, and they survive in memory mostly as an ingenious and dangerous curiosity. ... Cooperating with the desires of the government, the press did not publish any balloon bomb incidents. As a result, the Japanese only learned of one bomb reaching Wyoming, landing and failing to explode, so they stopped the launches after less than six months.

The "fix" will work. In my opinion, as long as unemployment isn't over 6% or so, economic stimulus packages have the desired effect. If unemployment goes any higher than that... well, we'll cross that bridge then. That's what the package will accomplish - people will buy stuff, manufacturers will employ people to make stuff, the world keeps turning.

Besides, if they don't do something, you'll hurt too. We all will... which is why they'll do something. There's a way you can keep from paying taxes, but you don't want to do that - the way is to become unemployed.

[MCQ]

Tightened lending standards, deflating house prices, inflating commodity (food/oil) prices.

Nope, don't see how a couple hundred bucks helps... not significantly anyway. For people with a mortgage rate reset coming up, that might cover a few months' worth of the mortgage increase.

[spotcatbug]

We've all watched this right?

Money as Debt (part 1 of 5 - there are links to the subsequent parts on the page)

[kieran]

Originally Posted by Taskiss Then read this: http://en.wikipedia.org/wiki/Balloon_bomb

I never knew about this Taskiss. Thanks for posting that.

You really do learn something new every day.

[faust]

Go ask the folks at work what they'll do with this money, nobody here said save it and only one person said pay a bill.

The other answers I got were go on vacation, buy a big tv, jewlry for wife/gf, toys forkids.

Now I hear Democrats want everyone to be part of the rebate, even folks who don't pay taxes. good grief, might as well print some new $$ up.

[Taskiss]

The "free money" isn't the only part of the stimulus package. By itself, it wouldn't do any good at all.

However, with a commitment to the banks, making the corporate tax breaks permanent, and THEN adding the tax rebate to the consumers, you've restored some measure of confidence that is the main reason we're experiencing the problems we are.

The housing industry is about 3% of the total US economy. That's why it was claimed that any issues wouldn't have the effect that it has. The reason for the dramatic effect? Perception. It was a self-fulfilling prophesy. Of course, the whole economy balances on perceptions such as this.

So, spread a bit of "feel good" around, lower the interest rates, make the tax breaks permanent, and things go back to what passes as normal.

Don't make the assumption that I think this is good economic policy, 'cause I don't. It's based on the premise that people won't increase their savings and that inflation will be kept in check by unemployment, and I'm not someone that believes government is the mechanism to balance the economy. I'd argue against it tooth-and-nail, but again.. arguing against success just makes you look stupid.

[Naderfan]

Just an aside, but the first rebate checks went out before 9/11. It had nothing to do with the terrorist attacks. We had a giant surplus and the government decided to "give it back" to taxpayers.

[Taskiss]

Originally Posted by Naderfan Just an aside, but the first rebate checks went out before 9/11. It had nothing to do with the terrorist attacks. We had a giant surplus and the government decided to "give it back" to taxpayers.

Read about it here:
http://en.wikipedia.org/wiki/Economi..._Act_ of_2001

The rebate checks are part of a $100 billion "stimulus" package, designed to provide immediate help for the economy.

http://archives.cnn.com/2001/ALLPOLI....04/index.html

The dot com bust (or whatever you'd like to call the 2000 recession) hurt. The tax cut was the response from the administration.
http://en.wikipedia.org/wiki/Early_2000s_recession

Also, about SteveC's comment - no, money isn't "real". It's purely a mechanism for exchange. People used to trade the work they did for material goods and services, and money just allows the exchange mechanism to be virtualized so we don't get paid in chickens.

[thegelding]

i said 7 years ago when they did this...if it is really to boost the economy, then they shouldn't give out checks, they should give out credit cards that only work in malls and stores and such...

people getting a check and then it going to savings or paying a heating bill or paying part of a mortgage payment isn't helping the economy...though it would help the people with debt or behind on heating bills or behind on a mortgage (though not much help if you are truly in mortgage trouble)

that said, if they are going to do this silly thing again, i guess it is best that people do put it in their savings or pay a heating bill or buy groceries or something more useful and needed than a buying a hd tv or iPod or something like that....do they even make hdtvs or iPods in the states? not to start that fight, but if this is a stab to grow jobs, shouldn't they try and focus the credit toward american goods?

me? if i get it i will just sign it over to my daughter's college account....kinda like pissing in the ocean since she is paying out of state tuition, still i guess a bit of piss is better than none...

actually i would prefer they not do this and instead take the 200 billion a year they spend in iraq to go to refunds and work projects (roads, bridges, lightrail, solar, wind etc)

but that is a tangent we don't want to explore....

[Taskiss]

Originally Posted by thegelding actually i would prefer they not do this and instead take the 200 billion a year they spend in iraq to go to refunds and work projects (roads, bridges, lightrail, solar, wind etc)

Nearly every US dollar spent on "the war" goes to an American company to pay a wage to an American. EVERY dollar spent on the space program stays in the atmosphere and NONE of it "gets thrown away in outer space". If you follow the money, you'll see. Oh, it may not go where you want it to go, but it stays in the US. Net result? It's a wash - the money starts and ends up in the US.

In those examples, money "moves" (moves from hand to hand), but that's a good thing. Money (and remember, money is just a labor hour waiting to be turned into material goods and services) standing still hurts the economy. That's why putting it in the bank is good, 'cause they lend it out and put it somewhere it WILL move and you still can move it yourself at a later date. That's why giving it back to the people is a way to step up the economy, 'cause statistically, 60% of it gets spent in the first week. It's like a shot of adrenaline in the heart of the economy. At that point, tax cuts to business, lower interest rates, etc, can provide the life support to keep the patient alive 'till it gets better.

The only time it hurts the US economy is when a dollar is spent on foreign labor, since labor costs are the highest cost associated with manufacturing or any industry. Those dollars feed another nations economy. If there isn't a reciprocal arraignment (them buying something the US produces), it's a net loss.

~ Now back to your regularly scheduled thread ~

[Kickaha]

Originally Posted by Taskiss The only time it hurts the US economy is when a dollar is spent on foreign labor, since labor costs are the highest cost associated with manufacturing or any industry. Those dollars feed another nations economy. If there isn't a reciprocal arraignment (them buying something the US produces), it's a net loss.

Well thank god that outsourcing thing never caught on...

[Windswept]

Originally Posted by Kickaha Well thank god that outsourcing thing never caught on...

[thegelding]

i would argue that war profits actually rarely benefit the common man, sure a few americans get really really rich, and some weapons companies get really really rich...i think road work and bridge work and lightrail work benefits americans much much more...and a lot less death involved

g