US Congress Tax Rebate!!!

[mikesilvia]

Yes, the "extra" money is nice (as I mentioned in my post above), BUT I agree with everything you said! My question to someone that is smarter in economics than me. How does this help anyone in the long term? Most of this is a short term fix at best.

I studied economics in college and it was my favorite subject. I'm no expert, but I will give my opinion.

President Bush is likely hearing from his advisers that he needs to inject money into the economy due to the lack of spending this holiday season and some new economic news that doesn't look great.

The general theory behind this is better to first look at the micro-aspect. A guy gets $300 and spends it let's say at Target. That money is then used by Target towards buying a new building (as part of thousands of shoppers). That $300 is then used by Target to buy building material and thus goes into the pocket of a construction company who then buys more supplies from a wholesaler and so on and so on. Each guy that gets the $300 pays tax as income and/or sales.

The goal at a macro level is that the $150 billion cycles through the economy 8+ times in a year and a lot of tax revenue is generated. Tax revenue goes up through income tax, sales tax and eventual capital gains tax as these companies turn higher profits. As companies turn higher profits they hire more workers and spend more money and the cycle continues. Another ripple effect is higher stock markets and more personal wealth.

That is the theory. But as some have already said they will save the money. Some will pay off debt. If the majority pay off debt and save the money then this package will do little to boost the economy although it will help with credit problems and increase savings. But while Americans may be saving and paying off $300 of debt, their country is going more in debt and your grandkids will be the ones the Chinese call the debt on.

For some reason the government has a money tree. They do, but the roots are in China and Europe. :)

[mikesilvia]

We are already paying for it with a weak dollar, high gas prices, housing that won't sell and the worst may be yet to come. I'm afraid things will be rough for a while. This will not help long term which is the problem. I this wasn't an election year they would not do this but anything to stay in power. JMHO

I fear you may be correct. The fed also cut interest rates by 3/4% and that is a huge sign that they still see major problems.

I agree also that this is yet another political stunt as the elections are only 9 months away and they all can say, "we acted quickly," while they also complain about the national debt and blame each other. :)

[Bondsaway]

Hey if they do it just more cash to put on a big flat screen tv for me!!!!! Plus some ebay sales!!!!

[Shayne1911]

Hmm.. I wonder if I'll get anything!!
Cards........ =)

[OnePimpTiger]

I agree with all those saying it's a bad idea...Granted I can definitely use some extra cash after having a house sit on the market for 7+ months and having one 10 month old and another baby on the way...but I would rather not get it this way. When will the government, Dems and Reps, realize that throwing money at a problem will not fix it.

Instead of throwing cash at the consumers and asking them to go on a shopping spree, they should be working to strengthen the dollar. Until that is done, nothing is going to be very helpful in making the economy as a whole stronger. And I think their rebates and the cutting of interest rates are having the opposite effect, driving the dollar weaker.

My thoughts are if everyone used the money like the government wants them to, maybe it wouldn't be so bad. But people will get their $1,200 and decide to go out and buy a $30,000 car and get even further in debt. Like someone said before, that might be a short-term small boost for the economy, but it puts the consumer and the economy as a whole in a worse situation for the long-term.

[Enigma]

I wonder if they will pull off with this what they did a few years ago. American taxpayers received a "rebate" a few years back of either $300 (individual) or $600 (couple). This was sent to help the taxpayers out economically. But it reality, it was a 0% interest loan on the next year's tax return as the money was taken away from your refund the following. Or if you owed money, you had that tacked on to what you owe.

[mintman2]

Yeah but what sucks is when you have folks like myself on Workers Comp and don't pay taxes. We're stuck in the cold with jack piddly.

Sounds to me like you're already receiving quite a bit of "free" money. Not assigning any blame/fault here but you're not working AND you're receiving a government check. That's a whole lot more than jack piddly in my opinion.


The whole idea of a rebate is ridiculous/ludicrous/preposterous ! The democrats keep saying they want to undo the Bush tax cuts but now want to give us a rebate ? Someone mentioned the term nanny state and they're exactly right. Why not just let us keep our money to begin with ? Because THEY know better how to spend your money ? This concept is like turning your paycheck over to someone else evary week and they go "hmmmm, I see you're having difficulties because I already take so much from you every week, here's a little extra pocket money for ya this week. YOU'RE WELCOME!"

[mintman2]

HEY

What about all the illegal aliens ?

[OnePimpTiger]

The whole idea of a rebate is ridiculous/ludicrous/preposterous ! The democrats keep saying they want to undo the Bush tax cuts but now want to give us a rebate ? Someone mentioned the term nanny state and they're exactly right. Why not just let us keep our money to begin with ? Because THEY know better how to spend your money ? This concept is like turning your paycheck over to someone else evary week and they go "hmmmm, I see you're having difficulties because I already take so much from you every week, here's a little extra pocket money for ya this week. YOU'RE WELCOME!"

AMEN! The best way to stimulate the economy is to give the people more money to spend?...what better way that by cutting their taxes!

[martyogelvie]

Tax cuts would be a much better idea. How about a flat tax...

As for the rebate check.. I suspect ours will simply go into savings but eventually it will be spent on a vacation.