Welcome to my blog where I discuss money, investing, politics, and anything else import in the world. I find it surprising that most people in their 30s have very little knowledge or interest in these areas. Of course everyone is interested in money, but very few take the time or have the discipline to properly save and invest it for the future or short term. For those who at least have the interest, I'll write about my experiences and methods of investing, and hopefully give you a head start in investing.

Tuesday, February 12, 2008

Myths about the Government Stimulus Package

I couldn't help but write a quick note to correct misinformation about the Government Stimulus Package. There has been a lot of discussions in both the media and discussion forums.
  • This is not merely an advance on your 2008 tax returns. This is an actual rebate of $600 that is in addition to what you would have gotten. Yes you are getting it early, but it is additional money. Which is why it will cost an additional $170 billion to implement.
  • The purpose of the stimulus package is to help the economy, not to help the individual. There is a lot of discussion about what is fair, where the cutoff should be, and who is wealthy. This is not meant to help the poor, unemployed, or middle class; it is meant to help the econonmy. Consumer spending drives the US economy, the main purpose is to pump money into retail and raise GDP. Unfortunately the Government can't do that itself, so it needs a proxy to do that, and that proxy is the consumer.
  • Opinion: There is no better way to get the money in the hands of consumers than a check. Debit cards, gift cards, etc. cost more, are less secure, less liquid, and provide no real benefits. Changing tax rates such as payroll taxes favor the wealthier and is a logistical nightmare. Plus you need a lump sum amount, not a small amount over many weeks.
  • Opinion: This stimulus package is good for votes, but will do little to stimulate the economy. Look for actual spending to increase slightly over the next few months, but it will not be sustained.

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