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Of Bandaids and Stimulus Packages
Posted by Raven on January 24th, 2009
The so called Stimulus Plan that Obama is pushing, is nothing more than a box of bandaids. Good grief. Have a look at some of this and tell me what you think.
Highlights of Senate economic stimulus plan
CASH PAYMENTS
Seniors, disabled and veterans – $300 payments to Social Security beneficiaries, and $300 payment under the Supplemental Security income program for elderly and disabled people living in poverty. Veterans receiving disability or pension payments would also receive $300. The cash payments are one time only.
This is helpful? 300.00 bucks?? I guess it would pay a bill or two or buy a couple weeks of groceries. But what will it do for the long term economy?
TAXES
Individuals – $500-per-worker, $1,000-per-couple tax cut for two years, costing about $142 billion; greater access to the $1,000 per-child tax credit for the working poor; expanding the earned-income tax credit to include families with three children; a $2,500 college tuition tax credit; $7,500 tax credit for middle-income, first-time home buyers who purchase homes in the first half of 2009; temporarily suspends taxation of unemployment benefits.
Businesses – An infusion of cash into money-losing companies by allowing them to claim tax credits on past profits dating back five years instead of two; bonus depreciation for businesses investing in new plants and equipment; a doubling of the amount small businesses can write off for capital investments and new equipment purchases.
Energy – $31 billion in tax credits to boost renewable energy production and promote energy efficiency, including making it easier for money-losing companies to benefit from energy tax credits. Makes tax credits for energy-efficient homes more generous.
Again, how does this help the long term outlook? And did you see the tax credits for money LOSING companies? Losers are…losers…and tax credits won’t change that. Only the business can change it’s status.
SPENDING
Aid to the poor and unemployed – $40 billion to provide extended unemployment benefits through Dec. 31, increase them by $25 a week and provide them to part-time and other workers.
Health care – $27 billion to subsidize health care insurance for the unemployed and provide coverage through Medicaid; $87 billion to help states with Medicaid.
Infrastructure – About $140 billion, including $27 billion for road and bridge construction and repair; $20 billion to repair and renovate school and university buildings; $9 billion for improved access to broadband; and $1.4 billion for western water projects.
Education – Almost $100 billion, including $77 billion in grants to states for special education, local school districts, and a $500 increase in the maximum Pell Grant.
25.00/week is really going to turn this economy around now isn’t it?? Shit…that might be enough to fill a gas tank. This will help no one, AND adding time to unemployment calendars will simply keep people from seeking work (and paying taxes, which finance this whole bandaid program). Why bother working a real job, when you get paid not to?? AND why bother getting a job when the government will pay for your health insurance, too???
The infrastructure boogla is yet another bandaid. The jobs won’t last; that is NOT a lot of money when one considers HOW much infrastructure there is across the US. Obama’s team has indicated this money should only go minority peoples who have no skills…so those who are skilled tradesmen in construction will still be on the unemployment rolls…and so on it goes.
January 24th, 2009 at 1:55 pm
I think we need bigger bandages…
January 24th, 2009 at 5:03 pm
I don’t know… some of this is political pandering, but some of it seems viable, especially the part about taxes. I especially like the tax credit to lower-income people who buy homes, thats a very smart move. I understand why you disagree with the part about tax breaks for companies losing money… but it makes sense the way they have done it. A lot of companies are struggling not becuase they have a poor business model or are poorly run, but because in this economic climate, where nobody wants to buy anything, they might simply just not be big enough to survive. This doesn’t necessarily mean the business isn’t viable, in fact, the way they set it up they reward ONLY companies that HAVE been able to turn a profit in recent years, without this terrible economic climate. I picture a small business in a random city.
No matter how perfectly this place is set up/run, it cannot physically force customers to walk in its doors. Lets say it sells electronics, and has about 10 workers. Its been open for 8 years, consistently turning a profit every year up until this year, where it is seeing massive losses. Nothing about the business has changed. It isnt a “loser,” its a “victim.” Meanwhile, the local Best Buy can afford to have massive sales to stimulate demand, because it can at least lower its losses that way. The small company can’t afford to do that, so of course it loses even more customers. So I suppose you could make the argument that this company IS a loser… it lost to Best Buy. However, the company will respond by either closing or slashing its workforce… resulting in more unemployed and just compounding a problem. However, if the tax breaks could help it hold on a little longer, long enough for demand to increase, it might survive, and keep its workers working. So while I see YOUR point, I just think there are circumstances where that tax break makes perfect sense.
I do agree with you on this though… 25 dollars a week? What the hell is the point of that?? Some of this is as dumb as the “tax credit” idea that was pushed.. was it last year? Two years ago? Oh well, its the government.
January 25th, 2009 at 7:36 am
There’s not enough bandages in the world to stop the blood that will come out of this.
January 25th, 2009 at 7:44 am
A lot of small businesses are up in arms over this, Bob. The SBA is saying this stimulus will not help them, this factor, with much. The probable regulations that are forthcoming w/ the financial markets will seal the deal and make it very hard for ANY business to survive. Esp the local small businesses. Taxes alone will cause many to shut.
Unintended consequences will become common with this President. Because he doesn’t have the experience to think things through; because he doesn’t have the vision to be all inclusive.
Until people are actually working, at good paying jobs that are not just some government handout job that comes with a timeframe, businesses will not see improvement in their bottom lines.
People need to start living within their means vs living on credit. They need to pay their bills on time, and they need to take personal responsibility for every penny they owe. Until THEY get this, the economy will not improve…OR, until Obama and his merry men (and prior, Bush and his merry men) pay off all the debts Americans have shouldered- but couldn’t carry on their incomes.
As recent history shows, recessions come and go because the people live to high. One day, the government will fall down as it tries to save it all…the weight of all the bills will be too much.
January 27th, 2009 at 6:08 pm
This stimulus package is simply Congress’s political pay back to Democratic constituencies. The real question is how much debt foreign creditors will finance – and if they don’t like this package, we’re not going to be able to finance this added debt.
Someone is going to end up closing down the party; if Obama doesn’t restrain his the Congressional leaders from his party, the market will – and that will be very ugly.
When fiscal and monetary policies are fighting each other, as they are now, those financing our debt are not going to have much confidence in the future. And if their loss of confidence translates to the interest rate on Treasuries rising, we’re in very deep shit.
One way or another, we’re in a big hole; the question is how much longer is Congress and a compliant President going to keep digging. And do the Republicans have the cojones to take a stand against the current political winds and at least propose responsible alternatives. I’m reading of some fight left among the House Republicans; it’s still not clear how many Senate Republicans will resist the temptation to sell out.
January 29th, 2009 at 7:56 am
It seems a little backwards to attempt to stimulate the economy this way. Some of it needs to be done other items are just pet project spending. If the idea is to put people back to work at decent paying jobs w/ benefits paying them more not to work is backwards. There is plenty to do but businesses don’t pay anything for it. Loosing our manufacturing base is the worst thing we could have allowed to happen; thank the Republicans and some democrates for that. The stimulus package doesn’t seem to get to the heart of the problem. Right now that is middle class debt. It was a huge mistake to give the banks all that money esp. w/out stingent regulations. Paulson more or less robbed us again after Wall Street raped us. If $10. an hr jobs are all that’s available the government should suplement wages. If you are making $20. an hr. and loose your job you probably can’t provide for your family w/ a $10. hr job. If you give small or large business a break it should be in order to raise wages. Seems like they are getting breakes but laying off workers. It’s viscious cycle: The company experiences low sales; to compensate they lay off workers. In turn the workers can no longer buy the companies products; result less sales for the company ; more layoffs ; banckruptcy etc. The economy ; the country ; the job environment is going through a transition. No one really knows where , when , or if there will eventually be good paying jobs w/ benefits again. You can’t fix this by throwing money at it. Corporations have to be regulated because they are basically irresponsible. They would rather spend millions on lobbyists, campaign contributions, extravigant executive bonuses and perks etc. expensive and unnecessary acqisitions ; than on just paying workers a decent wage. So, much for free market ethics
We need to and maybe have to start producing our own good here again. There is only one brand of shoe that is made in the U.S., now; all or almost all electronic equiptment is made somewhere else now :Farm equiptment, steel …. the list is huge of things we consume but no longer manufacture here. There is where the jobs are or went 
You can’t support a family by working at McDonalds 
Decent jobs have become a comodity and often a very exclusive club to get into. But that’s not the immediate heart of the matter. If you trace this back to the source it was all triggered by the housing/ mortgage crisis. It was inevitable. People in the amount of debt that we are who don’t have access to well paying jobs can’t pay off those debts. Everyone has financed their lives now and plopped it all into their mortgages. My suggestion may seem silly at first but after you think about it : it makes perfect sence. With the Trillions that are going out under the auspecies of “stimulus packag” ; you could pay off everones mortgage over the age of 21 (who own a house w/ in the last yr and 1/2), and making less than $100,000. a yr. Other stipulations would apply. But that’s the baisics and if you did this you would still have Billions if not Trillions left over for these other pork things. What would this do ? First you would immediately free the consumer (and this is the biggest group of consumers ), The government could negotiate a better deal w/ mortgage companies so the payoffs would be less. The mortgage companies get immediate payment of all outstandig mortgage debt. They now can invest in funding small busness start ups at a lower interest rate. They get all their money. The consumer is now free and clear and now has less monthly output which can be spent back into the economy. They could also gradually bear a littl more of the tax burden. Some stipulation about saving some of the money could be initiated : say in government bonds which could be sold a little cheaper to these people (so they don’t get in the same situation again and have a start at savings). This would put money back into the government w/out having to raise taxes. If for example you aloted 1/2 a million to ea. person : Money left over after paying off the mortgage could be made available to retro fit their houses w/ solar /wind energy. More money back into their pockets that is now not being paid to the utility company; and put back into the economy. You could set this up in the form of a low interest loan which could be partially paid by any excess overage after the house was paid off.
Tax credits could be issued to offset the cost for buyers of energy efficient homes. That’s as real as it gets : right down there where people live 
You might be employed to build your own house. Adjust the tax rate so that everyone who makes over $100,000 and the top 10 and 1% are paying their fair share. Establish the universal health care and take health care costs off the backs of businesses. Eliminate personal taxes for everyone over 50 who are retired : Why ? Because they will spend that money back into the economy. Republicans are always worried about government intrusion into business but nobody ever thinks about business intrusion into government. Stop the massive Corporate Campaign Contributions. Politicians need to be more worried about their constituents back home than about pleasing corporations. I think corporations should be rewarded who are the best to their employees (tax breaks : whatever) .The government ends up doing not what is best for the Country but instead ; what is best for IBM, Con Eddison, GM etc ….and nobody wins 
We need to get back to a nation of individuals rather than a nation of special interests. These are things that overfunding Head Start will not fix. These all have long term implications. Want to drive down the cost of groceries ? Put a garden in your back yard. The point is ; we have to get back to getting our hands dirty and doing things for ourselves while the economy transitions. Not everyone can have a high tech job right now: Not everyone is qualified to have one. There is where the education money needs to be spent. The Obama Stimulus Package is like a blind man striking out in all directions in a fight. He can’t see where the next blow is comming from so he just swings in all directions at once. We need to get down to specifics. We have to start educating people for jobs that don’t exist yet and have the foresight to envision what those jobs will be and then put funding in that direction: and I think Obama is trying to do that w/ the alternate energy / bio fuels etc programs. In the mean time people need to work. We could make our cities pristine : this is an opportunity . We could make our cities safe : we could pay people to watch dog their neighborhoods esp. the most crime ridden ones (might need to pay for fewer real cops). That would be like more cops on the street. Housing renewal programs and city beautification programs could all be bolstered and funded. Public works and public art works too : Anything to put people to work in their community to make where they live a better place. So, you turn the viscious cycle on it’s head and make is a reverse viscious cycle : One in which government takes in as much as it puts out not by taxing but by investing. Not in banks who squander the money on god knows what but on individuals who will in turn contribute back to the system. I don’t see banks trying to help people out of it but just the opposite : they seem to be tightening the grip. In the 40 yrs. I’ve been following politics I have seen nothing but short sited and inadequate attempts to do what needs doing. In the long run it doesn’t matter whether you call it socialism or capitalism or democracy or communism. What matters is what works. The bottom line is obvious: If you want a strong economy : You have to have a strong middle class. What I have proposed above would have an immediate and long term impact. That is my vision of Utopia America. Thanks 
Not another house should be built in this country that isn’t as state of the art energy efficient as we can make one. Forclosed houses should be refurbished under this same policy. That would put a lot of people to work at a decent wage right there. Everybody bring a hammer and come on over