Saturday, June 14, 2008
Tuesday, March 25, 2008
Political Intellectual Dishonesty
For the first time in my life it has been a good thing to be a taxpayer. In May 2008, anyone who file a tax return will receive at least $600.00. Wohoo!
But WHY? Why did the government suddenly decide to give everyone money? The official answer is that is was part of an "economic stimulus plan" that will jump start the economy. It seems that the senators and congressmen understand the concept that if people have more money it will help the economy. While I do agree with this concept, I personally will be spending my money on student loan debt and not on a new HD plasma screen TV.
What bugs me to death is that these same politicians don't understand the converse of what they just did. If giving people more of their money is good for the economy then wouldn't raising taxes be bad for the economy? I wonder if thought is ever taken to the effect on the economy when our government is spending over 3 trillion dollars a year. Do they understand that a bridge to nowhere being built with tax dollars HURTS the economy? Do they even care? This money being handed out is the equivalent of a very very short term tax break. I personally think that the politicians are thinking too short sighted. When all this money is spent it will be the equivalent of a sudden tax increase and will slow down the economy and spending for an even longer period of time.
MY PREDICTION:
$600.00 per person will help the economy for about 1 month (until they spend it all). Once the money is gone so is the stimulating effect. We will see consumer spending go up in May and June and possibly July. After that though, there will be a severe drop off now that the money went poof. We will go back to the same slump (or worse) until the market turns around under its own power. If the government really wanted to help they should have lowered FICA tax rates so that instead of getting a $600 check we got an extra $50 per month. That would permanently help the economy.
See me in 4 or 5 months and we shall see if I am correct.
But WHY? Why did the government suddenly decide to give everyone money? The official answer is that is was part of an "economic stimulus plan" that will jump start the economy. It seems that the senators and congressmen understand the concept that if people have more money it will help the economy. While I do agree with this concept, I personally will be spending my money on student loan debt and not on a new HD plasma screen TV.
What bugs me to death is that these same politicians don't understand the converse of what they just did. If giving people more of their money is good for the economy then wouldn't raising taxes be bad for the economy? I wonder if thought is ever taken to the effect on the economy when our government is spending over 3 trillion dollars a year. Do they understand that a bridge to nowhere being built with tax dollars HURTS the economy? Do they even care? This money being handed out is the equivalent of a very very short term tax break. I personally think that the politicians are thinking too short sighted. When all this money is spent it will be the equivalent of a sudden tax increase and will slow down the economy and spending for an even longer period of time.
MY PREDICTION:
$600.00 per person will help the economy for about 1 month (until they spend it all). Once the money is gone so is the stimulating effect. We will see consumer spending go up in May and June and possibly July. After that though, there will be a severe drop off now that the money went poof. We will go back to the same slump (or worse) until the market turns around under its own power. If the government really wanted to help they should have lowered FICA tax rates so that instead of getting a $600 check we got an extra $50 per month. That would permanently help the economy.
See me in 4 or 5 months and we shall see if I am correct.
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