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Stimulus Plan Summary
Topic Started: Jan 25 2008, 11:50 AM (431 Views)
STC
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Commodore
Admiralbill_gomec
Jan 28 2008, 04:22 PM
Dandandat
Jan 25 2008, 11:53 AM
I don't think this is a good idea at all. They are going to borrow the money to give it out, so now every one of the people who will get a check (me included) will be taking a loan the whole county will have to pay back pulse interest in the future.

I would be especially pissed off if I was someone who wouldn’t be getting the rebate.


Oh and I will be saving the money when and if I get it, which only proves this plan wont be as effective as they think it will be.

I agree. This is not a stimulus at all. More of a "rob Peter to pay Paul." The real kicker? Giving this "stimulus" to people who don't make enough to actually pay taxes.

You want true stimulus? Drop tax rates again. Cut the business tax. Cut the income tax. Cut the capital gains tax.

Both options (rebate, and tax cuts suggested by ABG) are a fiscal stimulus. Both come out of public finances, both lead to an increase in disposable income and consumption (depending on the marginal propensity to consume). Both will necessitate government borrowing if they are to act as a stimulus. No difference from that side of things.

There is a difference in that the rebates appear to be a 'one-off' payment to add liquidity to the economy. Tax cuts would be a permanent commitment - adding more pressure to government borrowing. I thought that was what some people wanted to avoid?
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Admiralbill_gomec
UberAdmiral
The current plan literally prints more money. This will further devalue the dollar.
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STC
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Admiralbill_gomec
Jan 28 2008, 05:59 PM
The current plan literally prints more money. This will further devalue the dollar.

That depends on how any increase in the government deficit is financed.

Supposing it was financed by new money. Would a further devaluation of the dollar be such a bad thing? Would make U.S. exports more competitive, reducing the trade deficit and providing an injection (Export revenue increase) into the economy.

The risk is that inflation would increase as a result of the falling dollar increasing import prices. But then, isn't the risk of doing this by a one-off tax rebate less than cutting income taxes, which is more likely to lead to a demand-led inflationary spiral.
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ImpulseEngine
Admiral
Dandandat
Jan 25 2008, 02:33 PM
ImpulseEngine
Jan 25 2008, 01:13 PM
Is this rebate supposed to be the same type of thing as we had in (I think) 2001?  If so, this (the rebate part) is just an early advancement of part of your tax refund.  Big deal.  First off, that just means we will spend less when refund time rolls around (I'm assuming that would be next year, not this one).  So let's hope the economy isn't in need of a jump start then. Second, many people won't understand that this isn't "free" money (as happened last time) and may spend it when they wouldn't have done so if they understood it was really part of their future tax refund.  Third, what if you're not getting a refund at all?  Does that mean you would owe the money back?  I'd really be ticked if that's the case and I was one of those people (but I won't be :)).

No, its not like 2003, its free and clear money. They will be borrowing the money and doling it out as stated above. It is not an early refund.

Are you getting this just from the article because I don't see it there. If not, where do you know this from? I have been looking around the internet and can't find an answer to this question.
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