The outlines of the deal include:
- a tax rebate of up to $600 per individual ($1200 per married couple), with an additional $300 for each dependent child
- a 100% increase in the amount of "new investments" a small business can write off as a tax deductions
- limited mortgage lending reforms
Many progressive interest groups have expressed their disappointment with the deal because it does not include bumps in unemployment insurance or food stamp benefits. Chris Hayes, Washington editor for the Nation and Brown University alum, has termed it, "Worst. Stimulus. Ever."
I'll defer to him on the mortgage aspects of the deal, but I will say that the tax rebate part is pretty good. For one thing, the rebate won't be limited to just people who payed income tax last year. There are millions of Americans (about 35 million) who work, but don't earn enough to owe income taxes. Many of these people don't even file income tax returns. In 2001, the tax rebate only went to those who filed returns, leaving out these low-income workers. This is both unfair and kind of stupid, since its these low-income workers who are most likely to spend the money. This year's rebate will go to pretty much everyone making anywhere between $3,000 and $75,000 a year ($150,000 for couples).
Second, the rebate takes into account the impact of children. The last time the government sent out rebate checks, a couple with no kids got the same amount as a couple with four kids. Again, not fair and not smart. Families with children are far more likely to turn around and put that money back into the economy. This year's rebate will expand for larger families.
So the rebate part of the stimulus package is good, the mortgage part is bad, and the business tax part is silly. Ideally, if the government decides to spend $150 billion on a stimulus package, we'd like to see at least an extra $150 billion in economic activity. That's certainly not going to happen this time, since some of the most efficient ways to get money into the economy (unemployment insurance, aid to states, etc) weren't included, but I do think, given the political realities, that this deal's not so bad.
5 comments:
Today Alan heard some kind of poll that suggested that if McCain ran against Obama today, or if Hillary ran against Romney today, there wouldn't be much of a difference between them. I know how ridiculous polls like this can be, but how possible do you think it would be for the Republicans to end up winning the presidency? I have been very dismissive of that possibility, but wonder if I should be more worried.
"The editorial board of The New York Times is endorsing Senator Hillary Rodham Clinton for the Democratic presidential nomination and Senator John McCain as the Republican nominee."
Will this have any serious effects? I know that people and organizations are announcing endorsements of candidates all the time, but the NYT I would think would be a big one. Would something like this ice Clinton winning New York? Or did she already have New York locked anyways?
Paul Krugman argues in today NYTimes that the package gives most of its money to people who are not in need, are generally better off and therefore less inclined to spend it. He also criticizes the plan (and the Democrats) for not including funds to help local and state governments deal with the crisis (something Hillary Clinton’s plan had included, as your blog pointed out).
But apart from the economics of the plan, the politics are very dispiriting. So eager were Democrats (like the Republicans) to avoid a downturn before an election that they let the Bush administration off the hook for the disaster that they are responsible for: running up a huge budget deficit; pushing through tax cuts for the rich (who, of course do not spend proportionately like those with less income); running a billon-dollar-a-day war off the books; lying (on the prescription bill costs); doing nothing to encourage energy conservation (increasing the flow of money to oil exporters—see the recent Financial Times article on sovereign wealth funds); and probably most significant, encouraging a lax or nonexistent regulatory environment that allowed banks and businesses to engage in a variety of nontransparent practices that helped produce the subprime crisis and other economic delights (think Enron).
Not only did the Dems not call the administration to task over these and other actions and inactions, but they have now helped them avoid the political penalty they should pay. And they did so in return for very little. Bush stonewalls them, e.g. vs. extending unemployment benefits, foods stamps, aid to communities in this package but including business tax breaks. He digs in as has done on other measures and they roll over. The Democrats cannot get a lame duck president with polling numbers in the single digits to come their way almost at all. (Right, he agreed not to push for making the tax cuts permanent.)
Instead of attacking each other, the Democratic candidates should be blistering this robber baron administration over what they have done to the country’s economy, environment, foreign policy—oops, got carried away there.
I told you it was dispiriting.
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