Bush's economic stimulus package

So Bush has finally realized the economy is in the toilet again on his watch, and this time no amount of anti-terrorist propaganda and flag-waving is going to distract the public from this problem. Bush is asking Congress for $150 Billion in tax relief for individuals and businesses, in an effort to jump-start the economy and prevent or shorten a recession. The following exerpts are from the Rocky Mountain News website, today's edition, shown in this font. My comments are interspersed, because most of you have probably figured out by now that I don't enjoy keeping my thoughts to myself!

Bush's urgent remarks gave fresh impetus to congressional leaders already hard at work on an economic rescue package that would include extra money for food stamps and jobless benefits in addition to tax rebates of hundreds of dollars each for millions of Americans. The hope is that people would immediately spend those rebates and give the economy a badly needed boost.

I'm sure people will indeed rush out to spend those rebates, if they happen. The problem is, in order to stimulate the economy spending needs to occur on consumer goods, not payment of debt. Right now people need help paying paying their mortgages and heating bills, and are not likely to spend their rebate checks on big-screen TV's, computers or new appliances. An economic stimulus works if it creates jobs, and increased spending on consumer goods does just that. But how can you ask people to spend money on luxuries when they are having trouble covering the necessities? You can't, unless you want to look like a jackass. (Nixon did it, nuff said.)

Bush said the rescue effort should be both quick and temporary, a one-time boost for a national economy that is in danger of sliding into the first recession since 2001, if it hasn't already edged across that line. The president's tone was somber in his remarks at the White House, but his mood was upbeat later in the day when he visited a factory to underscore his focus on the economy.
"Crank this sucker up," he exclaimed, an exhortation that could fit his hopes for economic revival, though he was referring specifically to a huge riding mower at Wright Manufacturing. Once the engine was roaring, Bush jumped on and steered the mower playfully.

One-time boost? Later in this same article we are reminded that Bush has tried this before.

Bush has gone down the tax rebate road before. Back in 2001, he added refunds of up to $300 per individual and $600 per household as a recession-fighting element of the tax cut plan that had been the centerpiece of his 2000 campaign.

Perhaps this is my own contribution to our national amnesia, but I had completely forgotten about that refund, though the above jogged my memory. I do recall now we were asked to spend our refunds on consumer goods, to splurge on something rather than pay for necessities (see previous comment on Nixon). My husband and I did use our rebate for a necessity, but at the same time we purchased a pricey consumer good - we put new tires on his vehicle. I guess that worked. I know it worked for us. At the time we were simply glad to be able to pay for what we needed without resorting to credit cards.

Despite darkening economic reports, he said that if Congress passes a quick federal relief package, "We're gonna be just fine." At the White House earlier, Bush avoided the word recession but acknowledged the economy was severely strained by the long housing slump and high oil prices.
"There is a risk of a downturn," Bush said.

"A risk of a downturn?" Talk about understatement! The foreclosure rate has skyrocketed, prices for everything from gas to bread and milk have jumped, the Dow is stuck in a downward spiral, jobs are hard to find, and he says there's "a risk of a downturn"? Wonder what tipped him off? Did his buddies lose too much money in the stock market? I'm pretty sure no one in the Bush family or circle of friends is facing foreclosure or fretting about the cost of groceries. In Real America, where the rest of us live, things are very different. I don't know about any of you but I'm starting to suffer from sticker shock when I go to the grocery store. Everything is so much more expensive, and buying basics like hamburger and orange juice feel like a splurge now. At the same time I feel very fortunate that we didn't buy into the refinancing craze and as a result our mortgage payment is stable. How bad is the overall economy when you reflect and give thanks for still being able to afford your house? It's bad.

Sen. Edward M. Kennedy, D-Mass., said, "We cannot forget that any effective stimulus plan must start and end with America's working families. The people who are struggling every day to pay their bills, heat their homes and pay their mortgages need our help now, and helping them is the best way to be certain that any stimulus goes directly into the economy."

Thank you, Senator Kennedy! You know, I'm tired of Republicans using Teddy Kennedy as the whipping boy whenever they want to bash Democrats. He has tirelessly supported the middle and lower classes and worked to create and protect assistance programs to help them manage, while so many Republicans only work to benefit their cronies in big business. During the times in which Republicans have controlled Congress, it has felt like Kennedy has been one of the few voices with the courage to speak out in defense of the middle and lower classes. Senator Kennedy should be revered, not reviled.

Any member of Congress who speaks out against a measure which will put badly-needed money in the hands of average Americans is committing political suicide, so this measure will likely speed through Congress. I don't know how long it may take before any of us see checks, and so far I haven't seen any information on how these rebates may be distributed. My only concern with this economic stimulus package is, of the $150 billion, wonder how much of that will go to businesses, and how much will go to individuals? The theory is if businesses receive an influx of cash they'll use it to create jobs, which will strengthen the economy. $150 billion is such a large number that it's hard to wrap your mind around it. Yet this represents 1% of the Gross Domestic Product, that's how they arrived at this figure. Their experts said that any stimulus package needed to be at least 1% of the GDP in order to be effective.

The rebate amounts for individuals have not been decided yet, but this article speculated that rebates could be $500-800 for singles and $1000-1600 for married couples. We'll have to wait and see. I doubt there is anyone in this country who would turn down a sudden and unexpected infusion of cash, but no one could be blamed for using that money to bring the mortgage or power bill up to date, to buy new shoes for the kids, or to fill the freezer and fridge. We each know best what we need most.

"The test of our progress is not whether we add to the abundance of those who have much. It is whether we provide enough to those who have little." - Franklin Delano Roosevelt

Later,
AuntieM