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Whats in this package?

Arvind Mahendra
Ranch Hand

Joined: Jul 14, 2007
Posts: 1162
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?


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fred rosenberger
lowercase baba
Bartender

Joined: Oct 02, 2003
Posts: 11256
    
  16

as i understand it, the government cut checks to most people who had filed an income tax return last year. the amount varied depending on how many family members you have.

the idea was that if everyone had an extra $1000, they'd all go buy big screen TVs, computers, and toys, thus dropping all that cash into the economy, 'stimulating' it.


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Pat Farrell
Rancher

Joined: Aug 11, 2007
Posts: 4646
    
    5

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.
Ulf Dittmer
Marshal

Joined: Mar 22, 2005
Posts: 41601
    
  55
I still have a photocopy of the Treasury check I received the last time around this was done, in 2000. It says "Tax Relief For America's Workers". Close enough :-) But it was only $300 then :-(


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Arvind Mahendra
Ranch Hand

Joined: Jul 14, 2007
Posts: 1162
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?
marc weber
Sheriff

Joined: Aug 31, 2004
Posts: 11343

I'm confused. You seem to be looking for some sort of logic behind a political response to economic conditions.

But seriously, if you want details, see Wikipedia - Economic Stimulus Act of 2008.
[ July 06, 2008: Message edited by: marc weber ]

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Pat Farrell
Rancher

Joined: Aug 11, 2007
Posts: 4646
    
    5

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.
Frank Silbermann
Ranch Hand

Joined: Jun 06, 2002
Posts: 1387
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.
 
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