Thursday, January 24, 2008

House Agreement On Economic Stimulus Package

Reports are coming out that House Democrats and Republicans have reached a compromise on an economic stimulus package. I don't think this stimulus is wise for the fiscal future of our country but I think it is a reasonable compromise:
Sources told CNN that the deal would pay taxpayers $600 and two-wage-earner households as much as $1,200. A Democratic aide and a Republican aide said the deal will include an additional amount per child amounting to about $300.

The rebates would be made available to individuals earning at least $3,000 a year and no more than $75,000 - or couples earning $150,000 or more, the sources said.

Earlier proposals to increase food stamps and extend unemployment benefits are not part of the agreement

A few comments:
  1. The minimum income limit is slightly too low. It's important to note that even those that don't pay income tax still pay payroll taxes. I think the rebate should've been a sliding scale based on the payroll tax paid in until the maximum of $300 was reached.

  2. The maximum wage levels for receiving the rebate is too low. $150k doesn't go as far in some parts of the country as it does in others. If the stimulus is to support the middle class nationwide then I think that should've been raised to somewhere around $250k.

  3. At this point it's unclear whether the Senate will pass similar legislation. Right now the Senate is currently trying to give telecommunication companies retroactive immunity for helping the Bush administration violate the US Constitution. Shameful...

7 comments:

bobett said...

Interesting debate on income taxes. I say get rid of property taxes in the state of Indiana and
go towards a consumption tax with a sales cap for the truly poor.

News Item:
(The Politico) After a late night negotiating, House Democrats, Republican leaders and the White House are ready to cut a deal on an economic stimulus package that allows all taxpayers _ including those who don't pay income taxes _ to receive rebates.
http://www.cbsnews.com/stories/2008/01/24/politics/politico/thecrypt/main3748213.shtml

From Ron Paul interview on Glenn Beck:

PAUL: Yeah, you are right. And all you do is you encourage consumption and we're overdoing consumption right now. It's not a tax rebate if you send somebody a check for $800 for not paying taxes. That's a welfare check.

PAUL: And that money really doesn't go to producing jobs. What you have to do is restore the savings and encourage capital investment. You have to eliminate taxes on capital gains and we have to do whatever we can, get rid of the taxes, the death tax and eliminate taxes on dividends and savings. All these things would encourage savings and then have a market rate for interest rates to give us the signal on whether we should be investing or saving or spending. But that doesn't exist anymore and that's why we have these perpetual bubbles. I think this bubble right now that has been kept together for quite a few years is a major problem and the unwinding of this problem is very critical. The biggest bubble's in the dollar bubble and now the dollar is coming under attack. And what are they proposing? Excessive spending, you know, deficit spending which, where are they going to get the money? They don't have any money in Washington. They either have to borrow from China or print it, which means there's more inflation. Or the Federal Reserve comes in and said, like yesterday, drastically lowering interest rates? How do they lower interest rates? They print a lot more money. Yesterday when they announced that, the dollar immediately reversed itself and sharply went down and it's the weakening of the dollar that is the crisis that we face because everybody suffers from that. You and I suffer because all of a sudden the dollar in that wallet buys 80 cents worth of goods instead of a dollar's worth. So we all get poor and we have to stop that cycle. http://www.glennbeck.com/content/articles/article/196/4897/

Kevin said...

I am not sure this is a good idea- we are going to have to borrow money from another country to pull this off- furthering our deficit.

Bobette- you wrote "go towards a consumption tax with a sales cap for the truly poor"

Could you explain that better for me? Not being snarky- just want to better understand it.

Jeff Pruitt said...

Kevin,

I agree 100%. I too think borrowing more money from China and others is a bad idea. The "good compromise" I mentioned in the post was the compromise between the Democrats and Republicans' original proposals.

I was viewing the outcome from the premise that this is, in general, a good idea - something I don't actually believe...

bobett said...

Sure,

Everyone XYZ buys goods and services, however it's estimated ONLY 70% of the populus pays income taxes, payroll taxes, property taxes and well taxes.
Z would constitute the truly poor
with no consumption tax on food, gas...basics are paid by the safety net Socialist anyways.

Here's an example of
how consumption tax could curtail
over-zealous spending of individuals. Pay cash for starters.

Yet everyone consumes. So unless,
you are truly poor ..destitute... why should we all spend money subsidizing a standard of living based on SPENDING & not saving? Here is an example, X owes rent & a car payment yet X chooses to spend money on other things not the basics but all
the consumption on stupid shopping.
Y spends money on the basic needs yet supports the X in their bad judgements on spending. Yet Y gets taxed for earning, producing & saving.

If xy, were taxed on consumption maybe we all would be united.
Z the truly poor gets a pass.

LP Mike Sylvester said...

This stimulus package is a complete and utter joke...

The Democrats PROMISED to install "Pay as you go" rules when they swept to power in 2006.

They are going to waive those rules, borrow 150 billion dollars, and then let future generation pay the interest and principal on that debt...

Both Dems and Reps should be ashamed...

Mike Sylvester

bobett said...

Kevin,

Your thoughts on this stimulus package...?

Bobette- you wrote "go towards a consumption tax with a sales cap for the truly poor"

Are you a professor?
Regardless, what's your input.

Charlotte A. Weybright said...

The rebate won't matter anyways if it isn't distributed until June or July. That's two more quarters into the year.

If I get anything I will pay off a bill or two - not go out and spend it on a frivolous purchase. On one hand, we're told to spend, spend, spend, and on the other hand, we're criticized for not saving and being thrifty.

The end all and be all seems to be more consumerism and that will cure everything.

You can't win.