The Stimulus Package

[Professor S]

The stimulus package tax breaks offers an extra $13 per paycheck on average through 2009...

http://finance.yahoo.com/news/Stimul...-14422717.html

Woohoo?

[The Germanator]

I find that part to be an interesting theory....The idea being that if someone receives a $600 check, they'll probably save that and throw it right in the bank. But, if they have an extra 10 bucks, maybe they'll go out for dinner or a movie because it seems like a more frivolous amount it might turn into frivolous spending. A small step, but probably a good one.

[Professor S]

Originally Posted by The Germanator

I find that part to be an interesting theory....The idea being that if someone receives a $600 check, they'll probably save that and throw it right in the bank. But, if they have an extra 10 bucks, maybe they'll go out for dinner or a movie because it seems like a more frivolous amount it might turn into frivolous spending. A small step, but probably a good one.

If anything I think it will get thrown into diapers/food/gas etc. The number is so small it's almost too little to be considered beyond necessities, much less stimulus, IMO. The question we have to ask ourselves is this: Does $13 a week build any confidence in a frightened consumer base?

I'm not a fan of tax payers receiving a big check once a year, for reasons I've talked about earlier, but I also don't think an extra $13 a week is going to help anyone pay their mortgage, spring for the extra bedroom addition they need or buy a new car. Stimulus is intended to stimulate the economy that makes work, and work creates jobs.

I've been biding my time on judging the stimulus, hoping that it will work despite my philisophical objections, but I'm confident enough to say that this stimulus bill will fail. The more I read about this stimulus, the more I realize that it isn't one. Small businesses have receive little to no help (unless small business regularly give out huge bonuses and buy private aircraft), and they employ over half of Americans. The middle class has received little to no help. So far the only groups that have made out on any of these legislative actions are large corporations and those that don't pay taxes in the first place because they'll be receiving free money through "tax credits", and are very unlikely to create any jobs with only a few hundred dollars extra a year.

There is NO stimulus to investment at all, and we see the results in how the stock market has reacted to the bill. Investment FUNDS our private enterprise and creates jobs, and it's been ignored.

The housing bill aids those that entered into bad mortgages and speculated using risky loan products, but doesn't help people who signed good motgages but have been laid-off and are having trouble making payments. It's pathetic and rewwards people for making poor choices, rather than helping everyone in trouble across the board. You know what would help people pay these mortages? Keeping a lot more of their own money.

Meanwhile small businesses and the middle class are left holding the bag, with the slim hope that public works projects will get the economy going again... the only problem is public works have NEVER improved the economy or created long term jobs, as illustrated in the Great Depression.

It's just so frustrating to see such opportunity get squandered because politicians only care about private enterprise as far as their campaign contributions take them. It's either big business or no business when it comes to stimulus help... meanwhile storefronts in my area keep emptying and unemployment rises.

[Professor S]

Here we go!

http://www.politico.com/news/stories/0209/19165.html

If we won't let companies fail, we only enable more failure. LET THEM FAIL. The fact is whethere or not the assets they hold are toxic, they are worth a lot, and someone will purchase them and the company. If the government continues to enable this type of poor management, we will never see an organic, darwinistic reformantion of the financial sector.

Every great success is the result of failure. Failure informs us, while not letting companies fail simply promotes medicrity or worse. Its actions like these that will EXTEND our recession, not improve it.

[Professor S]

[Jason1]

Originally Posted by Professor S

but I'm confident enough to say that this stimulus bill will fail.

Riiiiiight. This is the same person who said Obama would never be able to win a general election, then oh no changed his opinion to say that Obama will win, but it will be a very close election...GIVE ME A BREAK MAN! Obama won by 8 million votes!

I dont know why anyone even bothers to read your posts anymore...

People said I embarrased myself with my opinions...at at least when im confident in something I actually end up being right...

[Professor S]

Originally Posted by Jason1

Riiiiiight. This is the same person who said Obama would never be able to win a general election, then oh no changed his opinion to say that Obama will win, but it will be a very close election...GIVE ME A BREAK MAN! Obama won by 8 million votes!

I dont know why anyone even bothers to read your posts anymore...

People said I embarrased myself with my opinions...at at least when im confident in something I actually end up being right...

It's hard to be wrong when you don't say anything substantive... but thats not really the same as being right, is it? Especially when you quote only part of a sentence of my post and ignore any of the previous or continued content or the context in which it is presented...

As for the election, we've already hashed that out long ago with the conclusion you simply ignore the financial collapse in August as a game changer, and I believe it was a game changer (opinion I shared on the day of the collapse). Nothing further needs be discussed as we've said it all before. Call it a difference of opinion.

But in the end, how does this topic have anything to do with the election? We're talking about economics, not politics. If you wish to disagree with my criticisms, all I ask is that you do so on a content basis, and not an emotional one. I don't like the idea that the stimulus will fail. I have a 401k that needs it succeed. But based in the bill' merits, I simply don't see how it will work. I may be wrong, but that is an inherent risk when you put yourself out in the realm of ideas and don't base every argument on anger and spite.

What is it specifically about my concerns do you believe are unwarranted, and why?

What is it about the stimulus do you believe will work, and why?

You seem less convinced that this stimulus will work, than of the idea that I am wrong for the sake of my being wrong. A conversation is not running into a room an screaming "you're a big dummy" and then running out, relishing in your rapier wit. Its an exchange of ideas, and after all these years I'm still waiting for you to share one.

[Bond]

Gov. Jindal talks about the Stimulus Package on Meet the Press:

[BlueFire]

sigh...

[Jason1]

Look, nobody is saying the stimulus package will make the DOW rise 4000 points in 3 days or anything like that. But the fact of the matter is they say it will create or save at least 3.5 million jobs, and to me, that is money well spent that will help in the long run, and nobody here nor their will change my mind on that.

[Professor S]

Originally Posted by Jason1

Look, nobody is saying the stimulus package will make the DOW rise 4000 points in 3 days or anything like that. But the fact of the matter is they say it will create or save at least 3.5 million jobs, and to me, that is money well spent that will help in the long run, and nobody here nor their will change my mind on that.

I'm not saying the DOW should raise that much in 3 days either, but there is a long history of the markets responding immediately to poltiical decisions they like or dislike. When Clinton was elected during a recession in the early 90's, the markets jumped almost immediately. The market liked Clinton and it showed, and in the end the market was right about his long term economic impact. Measuring immediate market reaction isn't about long term success, but instead an indicator of healthy economic policy, and when the markets immediately retreat, negative reaction.

Jason, I've long given up on the idea that I can change your mind. If anyone is steadfast in their political philosophy, it would be you. I simply want to better understand your point of view, and I have to think that if you believe in progressive politics this strongly, I have to believe there must be convincing reasons beyond class warfare and contempt of wealth.

So, I'm not trying to change your mind, I simply want to understand your reasoning:

What is it specifically about my concerns do you believe are unwarranted, and why?

What is it about the stimulus do you believe will work, and why? (aside from throwing money at the problem)

[Jason1]

I just believe the stimulus will do what they say it will do. For starters, the infrastructure spending is much needed. I also love the money being spent for renewable energy, far too long we have known our dependence on foriegn oil has been a problem yet we have done little to nothing about it. Of course the other things which I would rather not go into detail, are mostly good too. These things will create jobs hopefully soon. Will it be enough to quickly end the recession and see the DOW rise to what it was in 2007? Hardly, but hopefully it will save people's jobs. At the very least, it will do worlds better than just ignoring the problem and giving the rich more tax cuts, which is what John Mcain would have done. How can the Rupublicans get upset over this spending, when they themselves spent ungodly amounts on an unneeded and unnecessairy war. We need to spend a little to get out of this mess that THEY created!

I have a conservative professor who said as he watched the speech last night his wife was furious when Obama again mentioned the tax raise for the wealthy. She claimed that just because they worked hard, got an education and have been successful they shouldnt have to pay more taxes than everyone else. I honestly understand that opinion, but my thinking is that rich people wont suffer from paying more than poor people, and its for the good of the country. This professors wife was also born and raised in Germany. If she dosent like it, go back to Germany I say.

[Professor S]

First I'd like to thank you for your thorough and level headed response.

I understand why you would want the rich to pay a higher percentage than the poor, if in the end the result was higher revenue to the government. But according to the CBO charts Bond posted earlier in this thread, thats not the case. Revenue actually increased a percent when taxes were lowered on the wealthy. The leading explanation is that when taxes or lowered, more wealth enters the economy and in the end more revenue is created by taxing more wealth less.

Lowering capital gain taxes has been proven to increase revenue to the government by more than that.

So my question is this: If raising taxes lowers revenue in many cases (not all), then to what end do we raise those taxes? Is it fairness? If so, is the purpose of our tax system a means to exact social justice, or solely a means to create revenue to run the government?

[Jason1]

Im not sure I believe those charts and graphs, and the theory that increasing taxes lowers government revenue. The revenue was probably coming from somewhere else.

[TheGame]

Originally Posted by Jason1

Im not sure I believe those charts and graphs, and the theory that increasing taxes lowers government revenue. The revenue was probably coming from somewhere else.

I agree with Jonbo, I still don't buy it. There has to be more factors that cause the numbers to appear that way. I don't think taking $5 more from every working person in america is going to bring down revenue. Nor do I think allowing people to keep $5 more of their check will bring revenue up.

But there's something more to it, take into consideration how the value of the american dollar has changed in the last 10 years, and the population. Is the slant of the GDP rising more steep then the one of the value of our money going down? Did higher tax cuts for the rich people really create more jobs in the last 6 years?