economic stimulus package…

| WASHINGTON BUREAU |   

WASHINGTON – In a rare display of election-year bipartisanship, the Bush administration and House leaders agreed Thursday on a $150 billion economic stimulus package that would send tax rebates to 117 million American families by spring.

With a possible recession looming, both sides made concessions that they normally might not have made, acting out of apparent fear over being punished by voters for doing nothing. And they did it swiftly, reaching an accord in less than a week of negotiations.

The proposal, which still has to pass muster in the Senate, would send slightly more than $100 billion in rebates to individuals, including many who paid no taxes last year, and provide nearly $50 billion in tax incentives for businesses, chiefly through faster tax write-offs of investments.

Whether it will stimulate the economy is open to question. Much depends on how quickly the money gets into Americans’ pockets and to what extent people spend or save the extra few hundred dollars they’ll receive from Uncle Sam.

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The vast majority of taxpayers would receive tax rebates, totaling $600 for individuals and $1,200 for couples, plus another $300 for each child, with no limit on the number of children. Those earning under $75,000 ($150,000 for couples) would receive the full rebates. Rebates would gradually phase out for those earning more than these income limits.

In a big concession to Democrats, the administration agreed to provide rebates to Americans who paid no income tax last year, as long as they earned at least $3,000. But their rebates would only be $300, and double for couples. They also would get another $300 per child.

Some House Democrats were unhappy with Speaker Nancy Pelosi for agreeing to drop the extra employment benefits and food-stamp increase from the legislation. Rep. Charles Rangel (D-N.Y.), chairman of the House Ways and Means Committee, said, “I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own.”

Pelosi said, “I can’t say I’m totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come.”

Though Pelosi promised quick action, the Senate always moves with more deliberation, though senators will face the same political pressures as the House and the White House in coming together on a package. Paulson said the government could begin sending checks 60 days after final passage, excluding another two weeks in April in which the Internal Revenue Service will be preoccupied with a flood of annual tax returns. “Speed is of the essence,” he said.

But it could take 10 weeks to mail all the checks, he said, causing some to speculate it could be June or later before everyone gets their checks. Some economists said that could be too late to head off a recession that could be starting in the current quarter.

At the White House, Bush said the plan provides “an effective, robust and temporary set of incentives that will boost our economy and encourage job creation.” He added that the agreement “was the result of intensive discussions, many phone calls, late-night meetings, and the kind of cooperation that some predicted was not possible here in Washington.”

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The tax-rebate plan is the government’s latest response to a housing-induced credit crunch that has tightened credit conditions in many markets and slammed financial markets, raising fears of a worldwide downturn.  Ben Bernanke, Chairman of the Federal Reserve, slashed interest rates three-quarters of a percentage point earlier this week and is expected to announce another cut next week.

I have a few comments here:This package is great, but under the right circumstances.  It’s good that Uncle Sam is giving out money to his tax payers, but at what expense?  Are we as a country putting ourselves into greater national debt?  Where exactly is this money coming from? 

The thing that sucks here is that this plan is perpetually feeding into the nations insatiable need to spend, spend, spend.  I can see how this idea is good in the sense that it will get the American people back out there spending their money to do their part to stimulate the economy, but at the same time, this is just a temporary fix.

What’s going to happen when the money runs out? — these people will be right back where they started, but with a new 27″ Flat Screen TV.  I can almost, without blinking, and with confidence say that over 90% of the American people will not apply this money to paying down their debt, but will rather spend it on things that may put them into more debt.

Although I will accept this check as a gift from my federal government, I’m a mixed bag of emotions right now and I’m sitting on the fence about this whole issue.  As someone who I going to put my $600.00 check straight into paying down my debt, I worry for the other American out there who aren’t thinking about their debt or paying off vital bills that will in the long run, if paid off, will keep more money in their pockets.

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How will you spend your check?!  All comments are welcome.

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~ by visionaryvanguard on Friday, 2008 January 25.

2 Responses to “economic stimulus package…”

  1. I agree 100% with the above statement. We are seeing this as a fairly helpless attempt to get Americans to go out there and spend the money, but, as a debt free person (entirely that is) I am intrigued to take this money as a gift for rainy days and long term investment. The point seems to be that we Americans will afford our luxury and cellphones and huge cars, no matter if we can or not. 0% APR right? In a Country where people negotiate like turks for their heating oil or other necessities just to afford a “out of balance lifestyle on credit” this economy booster could fail terribly. I believe we are just delaying the bigger problems resulting from our current Government to a “later” date. Those who do not write a check to themselves and cover debt with it are either left hoping for more free money, or they truly do not need it. And that money is indeed wasted on senseless stuff produced in China 😦 Save now… have later.

  2. Regarding stimulus packages and the economy, where do you get the best gas deals

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