POL: Rebate info

[14ers]

I do not understand why a lame duck President like Bush, would be pushing a rebate. And, it looks like both Democrats and Republicans are going to be declaring victory if this Rebate idea goes through.


Personally I have never understood the rebate idea. My state did this a couple times when there was a surpluss of funds at the end of the year; but last time I checked the US Government is not running in the black.

How is devaluing the dollar even further a good idea?

[flounder]

Giving money away = More votes = Win!

The fundamental theorem of government.

[JPhillips]

I don't know whether or not it's good policy as there's apparently some evidence that people won't spend it. The size of the rebate that's being discussed along with the probability of a 75 basis point drop in the Fed rate says to me that there's real fear that we could be headed toward a big recession. Remember we still haven't reached the peak of ARM resets, so consumer spending is likely to slide for several months.

In terms of overall spending, what the hell. We've given up all semblance of fiscal sanity, so at least this money is going to Americans as opposed to the Middle East or third world factory workers. I wish more people cared about a balanced budget, but they don't.

[Flasch186]

I'm in the camp that this wont stave off a recession (if were not regionally already in one).

[Arles]

Didn't work in 1975, didn't work in 2001 and I gather it won't work in 2008. If people were really concerned about avoiding a recession, they would either do a marginal tax cut or atleast reduce the capital gains rate. The only way to stave off or atleast reduce a recession is to increase investment in the private sector, not give everyone an extra $200 to pay down their credit cards.

[Flasch186]

yeah, i take a look at what I'd do with it and I dont see us rushing out to spend whatever we get albeit Im in real estate so perhaps Im feeling it a little more pronouncedly than some others.

[Farrah Whitworth-Rahn]

Originally Posted by Arles

Didn't work in 1975, didn't work in 2001 and I gather it won't work in 2008. If people were really concerned about avoiding a recession, they would either do a marginal tax cut or atleast reduce the capital gains rate. The only way to stave off or atleast reduce a recession is to increase investment in the private sector, not give everyone an extra $200 to pay down their credit cards.

The ONLY way? Pretty blanket statement there.

Care to explain why it is the ONLY way?

[JPhillips]

Arles: I won't argue tax policy with you, but the mechanics of a tax cut make it extremely unlikely that it would make any difference over the next twelve months. If the goal is to minimize a recession in 2008 a tax cut won't work.

[Arles]

There are numerous ways - but many need to be handled in the private sector. Outside of reducing regulation, tax burden and encouraging investment, there isn't a ton the gov't can do to stop a recession.

JPhillips,

If we are headed for a recession in 2008, not much can be done at this point. My statement was that if the government was really worried about doing the best it can, the ideas I listed would be there best shot. Still, much of this is cyclical and there's not a ton the US government can do outside of letting the private sector work through it. However, it can provide the means for a quicker recovery (ie, encouraging investment).

Still, there's no "New Deal" solution that will involve government spending its way out of a pending recession. And, my fear is that's the direction both political parties will take as to pander for more votes in this election season.

[JPhillips]

I'd probably prefer a 150 billion public infrastructure campaign focusing on bridges, water/sewer pipes, and public schools in disrepair. It would put people to work and fix a lot of things that are going to need repairing sooner or later anyway.

[Farrah Whitworth-Rahn]

Originally Posted by JPhillips

Arles: I won't argue tax policy with you, but the mechanics of a tax cut make it extremely unlikely that it would make any difference over the next twelve months. If the goal is to minimize a recession in 2008 a tax cut won't work.

I agree with JPhillips.

I don't think a measely $800 taken from one taxpayer and given to another is going to do anything to stave off recession. Nor do I think making the Bush tax cuts permanent will do a damn thing either.

[Buccaneer]

Originally Posted by JPhillips

I'd probably prefer a 150 billion public infrastructure campaign focusing on bridges, water/sewer pipes, and public schools in disrepair. It would put people to work and fix a lot of things that are going to need repairing sooner or later anyway.

You don't have a local utilities that would take of water/sewer pipes and therefore must rely on the federal govt to do so?!?!?

[Glengoyne]

Originally Posted by Farrah Whitworth-Rahn

The ONLY way? Pretty blanket statement there.

Care to explain why it is the ONLY way?

Don't you two talk?

[JPhillips]

Originally Posted by Buccaneer

You don't have a local utilities that would take of water/sewer pipes and therefore must rely on the federal govt to do so?!?!?

In a perfect world, yes, but in this world a lot of cities have so neglicted their water and sewer pipes that it will take a massive influx of cash to fix the problem. Under normal circumstances that cost would get placed on the utility users and in general I think that's fine. In this case, though, if the money is going to get spent regardless I'd just like to see it put to use in a way that puts people to work and also improves our crumbling national infrastructure. I think this is a far better use for the money than checks that will go to the credit card companies.

[Cringer]

The real story in this thread is Farrah siding against Arles. Not a big deal, but fun to read so far.

It seems the rest of the world feels a tax rebate will do absolutely nothing as well.

[JPhillips]

dola

My last post got me thinking, maybe part of the point of the rebates is to shore up the banking sector without having a politically suicidal bailout. It seems pretty clear that rebates will not be as useful as claimed, especially if they leave out those who don't pay income taxes.

Is the rebate designed to put tens of billions into the banking sector ASAP?

[Honolulu Blue]

Originally Posted by JPhillips

Is the rebate designed to put tens of billions into the banking sector ASAP?

The rebate, as I best understand its point, is to put a substantial amount of money in the hands of consumers, some of whom will spend it relatively quickly, and thus stimulate growth across the board - enough to avert a recession.

A public works program isn't a bad long-term plan, but the money isn't going to get spent fast enough to do what Bush & Co. want.

My hope is that it's not a pseudo-refund like the one in '03 (i.e., giving money back but not actually changing the tax brackets).

[Farrah Whitworth-Rahn]

Originally Posted by Glengoyne

Don't you two talk?

No.

[JPhillips]

Originally Posted by Honolulu Blue

The rebate, as I best understand its point, is to put a substantial amount of money in the hands of consumers, some of whom will spend it relatively quickly, and thus stimulate growth across the board - enough to avert a recession.

A public works program isn't a bad long-term plan, but the money isn't going to get spent fast enough to do what Bush & Co. want.

My hope is that it's not a pseudo-refund like the one in '03 (i.e., giving money back but not actually changing the tax brackets).

But plenty of research has shown that rebates like these, targeted only at those making enough to pay income taxes, tend not to significantly boost spending. People tend to spend based on their salary level, not on how much cash they have at the moment. This type of rebate goes predominantly towards paying debt or savings, both of which get cash into the banking sector.

I'm just wondering if this rebate will accually do exactly what is hoped for, shore up the cash starved banking sector.

[PilotMan]

I can't see how this is what is going to save us. On the other hand, I am getting the idea that everyone is overreacting a little bit to this whole recession thing. I mean, the writing has been on the wall for sometime. Just like Social Security for the last few years. You know that the bad stuff is coming. A couple hundred back isn't going to fix it all. Unless, they are painting it to be worse than it is, and then will claim success if and when a recession fails to completely materialize.

What we should be saying is how can we honestly continue to spend for things that we don't really "need" when the money shouldn't be spent at all, because we just can't afford it.

The government is the only place in the world where you overspend on purpose so you can justify spending more money next time. Why is it run so differently than businesses? Why can't we put someone in office who is going to manage the books and serve the people instead of trying to please everyone all of the time and putting off the shit until a later date, which is what seems like is going on?

[flere-imsaho]

A public works initiative is a plan I'd like to support, but given the way Congress works these days (and by "these days" I mean since the early 20th century), you know it's just going to end up being a huge pork barrel bill.

[miami_fan]

Originally Posted by PilotMan

The government is the only place in the world where you overspend on purpose so you can justify spending more money next time. Why is it run so differently than businesses? Why can't we put someone in office who is going to manage the books and serve the people instead of trying to please everyone all of the time and putting off the shit until a later date, which is what seems like is going on?

Quaint idea.

[dl5175]

My daughter needs a new set of golf clubs, I need a new monitor, I'll spend mine quickly!

[Greyroofoo]

I need a hooker so I can get the clap at the end of a movie, so I'll spend mine quickly as well!

[Raiders Army]

If my wife ever argued with me in a thread, I'd smack the stupid outta her.

[Farrah Whitworth-Rahn]

Originally Posted by Raiders Army

If my wife ever argued with me in a thread, I'd smack the stupid outta her.

I like to be smacked around.

[stevew]

It'd be nice to get somewhere around 1600 for me and the wife. Should be more than enough to furnish my front room, and still have some money to put towards another flat screen TV.

These rebates are going to count against 2008 taxes, probably? So I may want to adjust my witholding a bit, so I don't end up owing next year. I usually have it figured out where I have a minimal return <1000.

[sterlingice]

Originally Posted by PilotMan

The government is the only place in the world where you overspend on purpose so you can justify spending more money next time. Why is it run so differently than businesses? Why can't we put someone in office who is going to manage the books and serve the people instead of trying to please everyone all of the time and putting off the shit until a later date, which is what seems like is going on?

Perot in '08?

SI

[JPhillips]

Today should be a hell of a ride. The Asian and Euro markets have lost around ten percent since the NYSE was last open. The Fed is so spooked that they announced a 75 basis point cut now instead of waiting until the regular meeting next week.

My guess is the rate cut has little effect on the market today and stocks drop 300 to 400 points.

[Honolulu Blue]

Originally Posted by stevew

These rebates are going to count against 2008 taxes, probably? So I may want to adjust my witholding a bit, so I don't end up owing next year. I usually have it figured out where I have a minimal return <1000.

As I mentioned earlier, I hope not.

I've heard three ways this could work, which may or may not resemble what actually happens:

* Give $800 to each single person and $1600 to each married couple. This would only be for those who paid that much or more in taxes last year. It would be accomplished by zeroing out the 10% tax bracket for a year.

* Same as above, only for all tax filers, whether they pay taxes or not.

* A similar amount, but based on payroll taxes.

[flere-imsaho]

Originally Posted by PilotMan

The government is the only place in the world where you overspend on purpose so you can justify spending more money next time. Why is it run so differently than businesses?

Not to detract from your point (which is a good one), but I've seen this practice in play at many large businesses. In fact, I just got done managing a project for a large Pharma where I was told to find as many ways as possible to spend money on the project before the end of the fiscal year, as it'll help them justify future budgets.

[Galaxy]

Why I would love to see Bloomberg run:

http://firstread.msnbc.msn.com/archi...23/602598.aspx

I agree with him. Not just now, but long-term.

[SackAttack]

Originally Posted by Arles

Didn't work in 1975, didn't work in 2001 and I gather it won't work in 2008. If people were really concerned about avoiding a recession, they would either do a marginal tax cut or atleast reduce the capital gains rate. The only way to stave off or atleast reduce a recession is to increase investment in the private sector, not give everyone an extra $200 to pay down their credit cards.

I'd argue that helping people to reduce their current debt load can't hurt future consumer spending, as less debt = increased incentive to spend...but I don't think $200 is going to be sufficient to get the job done.

I think the credit issue probably dwarfs the ability of the government to do anything about it, short of somehow managing to unilaterally declare that existing debt is nonrecoverable...and that isn't going to happen.

So, at best, it's going to be a feel-good move.

[Flasch186]

negotiations do show some good highlights of possibilities. Fannie and Freddie could be buying loans of a much larger amount (good), getting money into the hands of the poorest workers (good - since theyre likely to spend it), Congress is actually working late with the president tonight (good - since our politicians are actually working).

[Flasch186]

negotiations do show some good highlights of possibilities. Fannie and Freddie could be buying loans of a much larger amount (good), getting money into the hands of the poorest workers (good - since theyre likely to spend it), Congress is actually working late with the president tonight (good - since our politicians are actually working).

[mrsimperless]

Do these people never think ANYTHING through?

Even if Bush were to give us all $10,000 who is to say that money will even be spent or will be spent on goods or services from domestic companies?

[CamEdwards]

Originally Posted by Farrah Whitworth-Rahn

I like to be smacked around.

How is it that so many people ignored this?

Y'all need your testosterone shots or something? Jeez.

[Crapshoot]

Its a band-aid problem for a gushing wound located elsewhere, and all it does is heighten the American consumer's sense that government debt is not fundamentally their problem.

Of course, I may be bitter since I'm a taxpayer (CA - no less!) who is an immigrant, and thus no rebate.

[Masked]

Originally Posted by Flasch186

negotiations do show some good highlights of possibilities. Fannie and Freddie could be buying loans of a much larger amount (good)

Hopefully any new limits will be high enough to cover a mortgage for a median priced home (assuming a 20% downpayment) for the highest cost areas (i.e. Bay Area), but the numbers I have seen are coming up short.

[Ksyrup]

I find this instructive:




What is everybody going to do with their money? I'm planning to put some/most of it toward credit card debt. I suspect others will do the same, and of course there are those trying to save their houses as well. What if the Dems and Repubs could pull off a bit of an election year PR move AND help their bank friends all at the same time? Why take a PR hit by doing directly what you can get positive PR for by doing indirectly?

[st.cronin]

I'm going to spend half my money on hookers and whisky. The rest I'll probably just waste.

[JonInMiddleGA]

Originally Posted by flere-imsaho

Not to detract from your point (which is a good one), but I've seen this practice in play at many large businesses.

I see you beat me to it. This is something that's very common in my experience, pretty much any place where next year's budget is based on some factor of this year's budget.

[JonInMiddleGA]

I saw this sentence in one of the latest AP articles & thought it might be one of the bigger understatements I've seen in quite a while.

Conservative Republicans, meanwhile, were likely to be restless over tax rebates going to those without income tax liability.

"Restless" doesn't begin to describe it. I'm thinking more along the lines of whatever word describes the act of marching with bad intentions while carrying pitchforks & torches.

edit to clarify: Just so there's no confusion, I'm talking about my personal reaction to it, not what I expect even the "conservative Republican" reaction to be.

[stevew]

Yeah, they have EITC, no reason to give out anything to those with no tax liability of their own. There's already enough programs that give shit away.

[Greyroofoo]

i'll probably invest my rebate or put it in a money-market

[JPhillips]

Originally Posted by JonInMiddleGA

I saw this sentence in one of the latest AP articles & thought it might be one of the bigger understatements I've seen in quite a while.


"Restless" doesn't begin to describe it. I'm thinking more along the lines of whatever word describes the act of marching with bad intentions while carrying pitchforks & torches.

edit to clarify: Just so there's no confusion, I'm talking about my personal reaction to it, not what I expect even the "conservative Republican" reaction to be.

I'm not a real big fan of the rebate, but there is some good economic theory behind this. The people with the most liquidity problems, which generally includes the poor, are those most likely to spend the money as opposed to saving it or paying debt. If the goal is to get consumers to spend this makes sense.

Of course I could also argue that anyone with a job pays payroll taxes and the payroll tax surplus goes into the general fund, so some percentage of their payroll taxes is a de facto income tax.

[Arles]

BTW, it looks like if you make more than 75K as an individual or 150K as a family, you won't get the rebate. Of course, those people pay approximately 60% of the income tax bill, so why give them a rebate?

This is just pure pandering. If it was across the board, it would make some sense but they are basically excluding an enormous chunk of small businesses by having that threshold.

[Galaxy]

Originally Posted by Arles

BTW, it looks like if you make more than 75K as an individual or 150K as a family, you won't get the rebate. Of course, those people pay approximately 60% of the income tax bill, so why give them a rebate?

This is just pure pandering. If it was across the board, it would make some sense but they are basically excluding an enormous chunk of small businesses by having that threshold.

This is my problem. Basically, your rewarding bad behavior by taking money away from those who make good decisions. For all the crap Bush gets about his tax cuts (which would of been fine if he cut spending to pay for it), the Democrats are just as pathetic. It amazes me the lack of foresight and knowledge that these guys have.

Your not going to fix the mortage problems. You just need to let it play out, I think. I really don't think you can offer a solution for it.

[JediKooter]

I'm going to buy a bunch of tree saplings and plant them, so my decendants can have jobs in the lumber industry.

[ISiddiqui]

Originally Posted by stevew

Yeah, they have EITC, no reason to give out anything to those with no tax liability of their own. There's already enough programs that give shit away.

Um... you realize this refund isn't just supposed to be a gift, right? Its supposed to be a economic stimulus. It is well known that people with lower incomes have a higher marginal propensity to consume than those with higher incomes. So they are much, much more likely to spend the refund than those who have, say, over $75,000, who are more likely to save.

If you are doing a rebate program to increase consumer spending, to stave off a recession (personally I think its a horrible idea), it makes perfect sense to give more money to those on the lower end of the economic scale. They'll actually spend more of it.