Update: Romney unveils a $250 billion plan “centered on several permanent tax cuts…permanently reducing the rate for the lowest income tax bracket to 7.5 percent from 10 percent, retroactive to 2007. He also wants to eliminate Social Security payroll taxes for workers over 65 and eliminate capital gains and dividend taxes on households earning less than $200,000 a year. He also would permanently reduce the corporate tax rate to 20 percent from 35 percent over two years and allow businesses to depreciate the value of new equipment purchases faster.”
Update : $145 billion to spend, spend, spend.
Too many people have been borrowing money and spending beyond their means–charging their credit cards up the wazoo, buying more house than they can afford, etc., etc., etc. So what’s Washington’s solution? Give ’em “tax rebates” so we can spend, spend, spend our way out of recession. President Bush takes to the podium this hour to unveil the outlines of his economic stimulus plan. Here’s the preview:
White House spokesman Tony Fratto said earlier that Bush also will outline about how much the government should spend in order for the short-term growth package to be effective. This new White House bottom line likely would significantly shape the president’s negotiations with Congress.
“It’s hard sometimes for people to understand how large this economy is,” Fratto said. “So he’ll have something to say about how large a package.”
Fratto said there are many ways to get quick agreement so that a measure can be in place and start working. Bush chose to lay out “principles” with few specifics to the American people now, while bipartisan negotiations with Capitol Hill are taking place privately. The White House feels Bush was out of the mix for too long, because he was away for eight days in the Mideast while Democratic leaders talked almost daily about the need to stimulate the economy — and how.
“What he believes is that we’ve got to do something that is robust. It’s going to be temporary and get money into the economy quickly,” Treasury Secretary Henry Paulson said Friday on CBS’s “The Early Show.” “It’s going to be focused on consumers, individuals, families — putting money in their pocket. And it’s going to be focused on giving businesses the incentive to hire people, to create jobs.”
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.
Economists said a reasonable range for tax cuts in the new package might be $500 to $1,000. A White House plan is looking at rebates of up to $800 for individuals and $1,600 for married couples under a White House plan.
I’m all for the government giving me back my money. But why not drop the economic stimulus pretense? Just give me back my money. If the government can spare these “rebates” and send them back now, why did they take the money in the first place? Forget this temporary candy. Why not make this “rebate” permanent?
Another point: Given the estimates so far, these “rebates” will be more than offset by proposed and scheduled tax hikes and spending increases in liberal-nomics-dominated states like Maryland, NY, and NJ.
Another point: When exactly would these “rebates” get into the hands of taxpayers? By the time the checks get cut and mailed, the recession could be over. Government has a way of lagging like that.
Another point: As I’ve said repeatedly now, stimulation-palooza will inevitably be larded up with special-interest pork and other spending goodies in the tens of billions of dollars.
And let’s be clear what Washington wants people to do with this money. They want people to spend it. Not to save it. Not to apply it to their debt. Spend, spend, spend:
Congressional leaders say any economic-stimulus plan may be as much as $150 billion.
“It’s getting money to people who are likely to spend it,” Leonard Burman, director of the Washington-based Tax Policy Center, said of the Bush plan. “It might do a little good for the economy.”
Bush has decided the U.S. needs a short-term economic assist from the government to avert a recession, White House officials said yesterday.
“The president does believe that over the short term, to deal with this softening of the economy, that some boost is necessary,” Deputy Press Secretary Tony Fratto told reporters at a briefing.
Ed Gillespie, senior counselor to the president, said today that Bush will call for a “timely” package of measures.
“The president is going to call for a growth package that is timely, that is direct, that is simple, that does allow for taxpayers to have more money to spend,” Gillespie told Bloomberg Television.
In other words: The stimulus will stimulate more of the same bad behavior that got people into trouble in the first place.
The WSJ sighs: “We’re all Keynesians Now:”
So famously declared Richard Nixon back in 1971, in what we thought was a different economic era. But after yesterday, we’re not sure what decade we’re in. With Federal Reserve Chairman Ben Bernanke and President Bush both endorsing temporary tax cuts and more federal spending as “fiscal stimulus,” an inflation-adjusted version of Jimmy Carter’s $50 rebate can’t be far behind…
…r. Bernanke embraced the explicit Keynesian notion that the government should write checks to “low and moderate income people,” who will spend it quickly and thus lift consumer demand. In the academic literature, this is called having a higher “marginal propensity to consume” than the more affluent, who tend to save more.
We’re all for putting more money in the hands of the poor and moderate earners, especially via stronger economic growth that will give them better paying jobs. But the $250 or $500 one-time rebate check they may now receive has to come from somewhere. The feds will pay for it either by taxing or borrowing from someone else, and those people will have that much less to spend or invest themselves. We are thus supposed to believe it is “stimulating” to take money from one pocket and hand it to another.
Don Surber pours cold water on stimulation-palooza:
Instead of “doing something,” politicians should do nothing. They have already messed things up.
In the 1960s, people complained about the redlining of inner-city neighborhoods. Banks would not lend money to people to buy homes in the slums.
Politicians changed that.
Today, banks loan money to people who can’t repay loans. These are called subprime mortgages. Lo and behold, the live-beyond-their-means crowd defaulted on these loans.
Now the politicians are blaming the banks and want to save the “homes” of those who don’t pay their bills.
Here’s how the Surbers save their house. Every month, I get out this thing called a checkbook. I peel off a check and write out an amount and sign it. Then I put the check in an envelope and mail it to the bank.
I could do this electronically, but I’m old-fashioned. I pay the mortgage first. By mail.
Congress should encourage such behavior. It motivates people to show up for work. They show up and taxes get paid.
Of course, first Congress has to live within its means – or better put, within the means of taxpayers.
Instead, Congress and President Bush are moving to encourage bad behavior. They will reward the Corvette owners and designer jeans ladies to spend, spend, spend without ever having to pay back.
Getting into a bidding war over how big an economic stimulus package to foist upon the taxpayers is not a confidence builder among the great majority of us who don’t own Corvettes, don’t wear designer jeans and don’t miss mortgage payments.
I hope we vote accordingly.
Scott Ott pleads: “Mr. President, Don’t Stimulate Us.”