What exactly is an economic stimulus package? what is contained within it that is supposed to help the economy and how? How is this money channelized into the blood line of the U.S. economy? or does this package manifest itself in the form of mere incentives?
I think it was more like $600 per taxpayer. It started out about $1000, but was cut.
The idea is that with money in your pocket you will spend it to buy stuff. This will let the retailer make money, the distributor make money, the factory make money. All these people making money will help the economy.
But, over history, economic stimulus packages are nearly always either the wrong amount or the wrong time. Many of them take so long to get money out, that the economy has changed, and the stimulus just feeds inflation.
In the current case, the amount has been eaten by other inflation, gas prices, and the credit crunch.
Using your stimulus check to pay off credit debt or your mortgage does not have the desired impact.
But if the bulk of electronic/car manufacturers are not American, this sort of a relief package is kind of banking on the hope that those oversea firms will re-invest that money back into the U.S. And what of the 2 billion a day borrowing that the U.S. does? isn't the int. accumulating on that going to be a drain as well thereby transferring the relief out of the U.S?
Oh, you want to know why the politicians did it? Its easy.
There is nothing that politicians love more in an election year than giving money to voters. It tends to make the voters love the politicians, and thus vote for them.
The big reason for the Stimulus Package of 2008 is that there is a national election in November 2008.
The politicans are comfortable that the voters will never realize that the money that they are receiving is there money, and that the reason the taxes were collected in the first place is to pay for government, defense, welfare, and all the rest of the stuff. Since the politicians did not spend less, the money that they are giving to the voters will have to be collected real soon now.
People want to believe that the government is in control of the economy, and the government is willing to let them believe it -- lest they vote for someone who _will_ claim to be able to control it. It's sort of like that South Park episode about 9/11 conspiracies.