Last week, when President Bush outlined his proposed stimulus package, someone asked me what I thought. My reply:
First, it will raise the national debt and deficit during “wartime”. FDR was more fiscally conservative.
Second, as it sits 40% of people won’t get the whole “rebate” because they didn’t pay enough taxes. Those 40% of people are the same people most likely to have a really good way to spend $800-1600. Like the rent or mortgage.
Third, as if sending a bunch of checks in *June* (at best) is going to fix the recession we have *now*. A check in June doesn’t help Joe Average find a job in February.
Well, now we have a “compromise” in the works, and just like Solomon proposing to cut the baby in half, this one isn’t really good for anybody.
The International Times Herald notes that the Fed may have already done all they can do, and tells us that the compromise reduces the “rebate” to $300 for individuals and up to $1200 for families. Oh, and some vague business tax incentives and homeowner relief measures. To round things out, here’s coverage from the Associated Press and CNN. If you’d like to get more into the details, please check out TheStreet.com‘s coverage.
They’d better shake a leg, because the Christian Science Monitor points out that the “Economic Outlook Dims Sharply.” Japan’s Mainichi Shinbun (or, “Daily Newspaper”) points out that this emergency relief would cause the deficit to balloon further. If you think the deficit has anything to do with our current financial woes, then you must think this would be bad.
Onward to the opinions of actual economists! Paul Krugman is inclined to cautiously agree that maybe the Fed has run out of ammo unless they haven’t, and furthermore the compromise stimulus bill will be a disappointment. Stephen Dubner of Freakonomics shares my insight that stimulus 5 months from now hardly helps us today. EconoSpeak calls it “Little Bang for the Buck“. The Economic Policy Institute says it is “Missing the Target” on multiple levels.
He’s no economist, but Jim Cramer has some opinions about how this package may effect the markets. And in the interest of fairness, I conclude with several other opinions: Dave Johnson of Seeing the Forest notes that normally conservatives are all for “cutting spending” — although he does not point out that this package is in fact more spending; John Aravosis of AmericaBlog accuses Congressional Democrats of “giv[ing] away your stimulus check”; and the ArchCrone of The Crone Speaks points out that the people who could most use a few hundred bucks probably won’t get a darn thing.
So my opinions from last week are more-or-less confirmed by both experts and other commentators: a big nothing that will cost a lot of money.
cross-posted at TheModerateVoice