With the proposed stimuli, just about through the House, I am not sure I see it.
This a blurb from a Wall Street bank regarding the Stimulus. (When I see something, that sums up my views well, I will use it - even if it sums up opposing views, I will use it.) AMT stands for Alternative Minimum Tax:
"Fiscal stimulus may provide some support for various sectors, like broadband, telecom, e-health and asphalt, but there is really less in the package than meets the eye. For all the talk about “infrastructure”, only $150 billion of the $789.5 bln plan is targeted for such. Go figure. The $54 bln aid for the states barely cuts into more than half of next year’s expected fiscal shortfall. The tax breaks do not involve changes to tax rates that elicit permanent changes to spending behavior – $400 individual tax breaks are going to likely exert as much of a tepid impact as last year’s rebates. Tax breaks for housing and auto buying leave us less than inspired. Temporary relief from the AMT is something we see every year – but is still seen as “stimulus”. Jobless benefit extension will help buy food and assist people to meet their rental and utility bills, but we fail to see how the recession ends with these measures. Note that the White House began to leak out proposals for mortgage loan modification – a new program to subsidize mortgage payments for troubled homeowners who have gone through a standardized reappraisal and affordability test – these tests would occur before the borrower becomes delinquent. That is the new wrinkle."
-2outof4
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I read somewhere that U.S. consumer spending (i.e., borrowing on credit) is expected to shrink by $2 trillion over the next few years. So in my view, the "stimulus" package is just trying to reduce the rate of savings (i.e., paying down debt) by borrowing $800 billion to spread around the economy in areas that the government feels are good investments where there may be sustainable private growth in the future.
ReplyDeleteThe U.S. consumer has been overspending and this is just a hack fix to slow down the rate at which intelligent financial decisions take precedence. If it happens too fast, too many businesses go out of business because they have relied on excess in the system, people can't find work, and the country becomes unstable.
I'm sure my Senator is thinking,
"I'm sure after a few years, we'll have less corporate scandal and U.S. citizens will be employing sustainable savings rates. This will result in less need for government intervention and our country will prosper once again. I just can't wait until we are growing too fast and we can tax $800+ billion in surplus out of the system so we can pay back our debt with interest."
What's the quote? "Democracy is the worst form of government except for all others." What's the longest lasting democracy in recorded history? Anyone want to give an over/under on this one?