Recent talks about the economic stimulus package have gotten me to question whether or not this proposal will actually do the economy good. Yes, the stock market has been up and down the past few weeks, but that's how the market goes. If we are headed for a recession, the economy is not going to plummet all at once. It will take several months, even years, of a steady downfall and there will be numerous warning signs of a failing economy.
According to former Federal Reserve chairman Alan Greenspan, "You don't gradually fall into recession, you jump."
Furthermore, this rebate may stimulate the economy for a little while, but in the long run, we will still have to face our economic demon.
According to an article written on the Associated Content website, the details of the economic stimulus program state "Individuals that pay income taxes would receive up to $600 and working couples earning enough to pay income taxes would be eligible for $1,200 in rebates. Those with children would receive an additional $300 per child and workers earning less than $3,000 per year, not paying income tax, are eligible to receive a $300 rebate."
Does this mean that people in the lower tax bracket, who don't pay taxes at all, will be getting $300 back from the government? Why, yes. Yes, it does. Poorer families do spend their money in the same economy the middle and higher classes do, I agree; but for some reason it doesn't make sense to me to give money back to those who don't pay taxes. And what about all those individuals who find government handouts repulsive? I haven't heard anything in the news or from my social networks about this being exactly that: a government handout.
Then there is the issue of how this money will be spent. The lower and lower-middle class families will likely be spending the money on paying off credit cards or their heating bills, I know I will be. This counters what the government expects us to do: to put the money into the hands of small business owners in order to spin up the spending process and create more jobs.
Glen Beck, a known radio host and host of the CNN program "Glen Beck," has another idea for solving this slight economic pitfall.
"What we have is the second highest corporate tax rate in the world, about to be the first. We've got to slash those rates. You've got to do permanent things. And you also have to take a bitter pill.
"People were stupid, they got into houses they couldn't afford. Banks were stupid. They lent too much money out. They got greedy. You know what? They need to feel the pain. The homeowner needs to feel the pain. You cannot keep giving aspirin and Band-Aids for these [outrageous wounds]."
The government is just looking for a way to stimulate the economy.
But let's think about that statement for a second. A stimulant is something that gives you a temporary high, such as caffeine. But the downside of that is (like caffeine) once the high is gone, things go back to how they were before, right? So even if this stimulus package helps us through the next few months, the bigger issues within our economy will not be solved by it.
According to Lou Dobbs, former chief economics correspondent for CNN news and the current host of "Lou Dobbs Tonight" on CNN, "all of us should recognize that the stimulus package will be inadequate to drive sustainable growth in our $13 trillion economy. An emergency Fed rate cut and an economic stimulus plan are short-term responses to our complex economic problems."
So why is the government instating this stimulus package now? Some think that Bush wants to get in good with the people before he leaves office, some claim that it's because it's an election year and the candidates need something to talk about. Whatever the reason, the real issue is that this is an unnecessary program that may only lead to more financial woes. If we are really going to revitalize our economy we have to find a way to pay off our debt, and spending more money is not going to get us there.
