Posted on 08/06/2008 9:39:34 AM PDT by djsherin
Congress enacted the tax rebate program earlier this year because it perceived a growing risk of recession. In addition, it feared monetary policy alone would not be effective because of the dysfunctional credit markets. As American taxpayers know, most of the rebate checks have now been mailed and cashed.
Those of us who supported this fiscal package reasoned that the program would boost consumer confidence as well as available cash. We hoped the combination would cause households to spend a substantial fraction of the rebate dollars, leading to more production and employment. An optimistic and influential study by economists at the Brookings Institution projected that each dollar of revenue loss would increase real GDP by more than a dollar if households spent at least 50 cents of every rebate dollar.
The evidence is now in and that optimism was unwarranted. Recent government statistics show that only between 10% and 20% of the rebate dollars were spent. The rebates added nearly $80 billion to the permanent national debt but less than $20 billion to consumer spending. This experience confirms earlier studies showing that one-time tax rebates are not a cost-effective way to increase economic activity.
(Excerpt) Read more at online.wsj.com ...
I didn’t get a check. I am in the “make too much to ever need help” category.
Of course, my senior citizen father needed me to help him file his taxes for the first time in years so he could get his “rebate”.
If not for certain commandments from God, I would have camped out by his mailbox waiting to get MY money back.
True to their nature the congress critters enacted legislation that was designed to help them stay in office, not legislation directed at a stimulus. They use their power of the purse to buy our votes election after election.
If their primary goal had been to stimulate the economy by getting more money into the pockets of Americans they could have done it without all the posturing and months and months of delay. All they have to do is cut the gas tax, and if that’s not enough then cut the FICA bite, and then the withholding for income taxes. This would put the money directly into the pockets of Americans the very moment it was passed and signed into law, not months and months later. Give the money back to the people whose money it is to start with. Every rebate they come up with, every stimulus package is nothing more than yet another way to take the rich and give to the poor.
And cutting the tax bite would not have the tremendous overhead that sending out checks to everyone has.
Until we find a way to stop them from using our own money to buy our votes it’s not going to improve.
Neither did I. It went to the VA for medical expenses.
The theory is that if taxes are lowered, then spending will go down so expenses meet revenues. Therefore, according to this theory taxes should be cut first.
Part of President Bush’s greatness is that he is the first president in the history of America (maybe the world) to lower taxes in time of war. Unfortunately, the Democrats (and some Republicans) in Congress refused to reduce spending, which has resulted in increases in budget deficits and a larger national debt (though as a percent of GDP, the national debt is fairly small, but growing).
As I said, spending cuts just don’t happen the way we’d like.
Thank you for your service!
There are those who did far more than I who deserve your thanks.
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