ECONOMIC STIMULUS - WHO'S PLAN IS BEST?

[Aknauta]

investorinsight.com


ECONOMIC STIMULUS - WHO'S PLAN IS BEST?
A BETTER QUESTION - DO WE EVEN NEED IT?


by Gary D. Halbert
January 7, 2003

President Bush's Economic Stimulus Plan

In an effort to pre-empt the Democrats' plan, the White House said on Monday that Bush's stimulus plan would include $600+ billion in expenditures over 10 years to boost the economy, including providing over 90 million taxpayers with a tax cut this year and benefit some 35 million people who get income from dividends. "The president's plan will encourage consumer spending, it will promote investment throughout our country and in the business community and in small business, and it will also help the unemployed.", said White House spokesman Ari Fleischer on Monday.

The Democrats, as expected, have been railing that the Bush plan is merely more "tax breaks for the rich," it doesn't help the working class and it won't help the economy in the near-term. What else is new? But before we go there, let's look at the highlights of Bush's latest plan:

$600+ billion in new spending and tax reduction over 10 years;
Accelerate the 2004 tax cut into this year (more on this later);
Eliminate entirely the tax on stock dividends paid to investors;
Corporations - accelerated tax write-offs for capital spending;
Increase tax credits for families with children to $1,000;
Extend federal unemployment benefits; and
$10 billion in new financial aid to the states.


the Democrats have circled the wagons (http://www.investorsinsight .com/article.asp?id=gh010 703)

[Reccos]

This is quite surprising that people haven't responded to the question as to whether an economic stimulus package needed at this time.

Quite frankly, if I had to make the choice, I'd take the Dems plan over this one, as the costs are all in the short term and given that some significant money would go to states for homeland security measures and highways.

If it wasn't clear before that the President has a limited view of the role of government in a modern economy, and one of the weakest economic teams in a decade, then this package sure makes the case!

The people won't spend the money in the economy as President Bush's measures won't lead to increased spending and increased investments.

The belief that deficits are acceptable during low economic cycles is not supportable in this case without reducing the size of government. It will be shown by the end of the President's term not to have worked. Tax cuts are great if they occur at the beginning of a new economic cycle heading upward. They simply create huge deficits when their timing is wrong, as it is now.

Not only that, the cost of the President's package may be $100 billion in the first year, but the long tail of the costs of this approach will be felt long past the end of his term.

I truly wonder what Mr. Greenspan really thinks of this approach and how much he must wish he had President Clinton to deal with as he actually followed his advice throughout his two terms of office. At least President Clinton understood that if he didn't follow the Greenspan logic, his deficit would have been so huge at the end of his first term, he wouldn't have been re-elected.

Hmmm, is this economic stimulus package another of President Bush's faith-based initiatives?

[angelus]

</span><table border="0" align="center" width="95%" cellpadding="3" cellspacing="1"><tr><td>Quote </td></tr><tr><td id="QUOTE">The people won't spend the money in the economy as President Bush's measures won't lead to increased spending and increased investments.
[/QUOTE]<span id='postcolor'>
Oh really? And where do you get your psychic information from? Look, every time there has been an across the board tax cut in the history of our country, it has caused revenues to go up, and it has caused more spending on the economy. The stock market is not the economy. Going out and even buying a hamburger is what helps the economy (although, hopefully, we'll all buy other stuff too).

At least, this is what history has taught us.

Reagan's cuts didn't take effect really until almost the end of his second term. But they were there earlier. They started slow and the recovery was slow, but it was there and steady, with one minor dip in the early 90's. Just because a cut today doesn't equal a booming economy tomorrow, don't be fooled into thinking it won't equal one a week from now (not actual terms, time frames have ben scaled down).

[ALLEN L. WELLS]

I LIKE PRESIDENT BUSH'S PLAN FOR TWO REASONS:

1. IT IS MORE INCLUSIVE OF ALL TAXPAYERS.

2. IT REMOVES TWO UNFAIR TAXES, DOUBLE TAXATION OF DIVIDENDS AND THE MARRIAGE TAX.

THE DEMOCRATIC PLAN, AS USUAL, FAVORS THEIR VOTING BLOC. IT ALSO GIVES MONEY TO PEOPLE WHO DON'T PAY TAXES.

[angelus]

Exactly, Allen. You hit the nail on the head. Their plan is all about keeping their bloc dependent on them, so they can try to regain all power and then keep it, by slowly forcing others to depend on them through higher taxation of the &quot;evil rich&quot; and elimination of taxation on the &quot;pure poor&quot;.

[Reccos]

Angelus: Thanks for making the case against the need for an economic stimulus now with the spot on reminder that President Reagan's tax cuts didn't start working until near the end of his second term.

When consumers fear for their jobs in an unstable period of time, they aren't going to rushing out to spend money they aren't sure they will have coming in over the next six months or so. Tax and spend governments like the Keynesian approach to priming the economy during bad times. It is unfortunate that President Bush still hasn't got a decent economic team in place with a vision and a strategy that will restore confidence in the economy and get business investing again. Just maybe he is too distracted by events in Iraq to get the economic priorities right domestically.

[Reccos]

Angelus:

Your seemingly faith inspired love for the President's stimulus package parallels for your seemingly unbridled enthusiasm for the once great Dallas Cowboys.

The Cowboys current leader/owner (not new coach) is on a talent level with the current President. http://gopusa.com/iB_html/non-cgi/emoticons/tounge.gif

Watch for the tax cuts to benefit the economy much later than the short term, WHICH IS HIS TARGET!! Lucky for President Bush there is no strong Democratic challenger on the horizon. Then again, I don't think Bill Clinton was a serious challenger at the start of his campaign.

Now if the President is smart, he will keep some sort of war going in the run up to the election to avoid his father's fate when he ignored the economy.

[angelus]

Reccos, which would you rather have:

A slump now with a long term, long-lasting boom, or a boom now with a long-lasting recession because of bad (help us now, screw the future) policy?

I'd rather weather a bad storm, and exercise something not found much in Washington:
Discipline.

As for the Cowboys, yes, they're a &quot;once great&quot; team. They will rise again. Jones has realized, I think, the need for a head coach with turn-around experience (see the Giants, whose 5 year rebuilding plan took 18 years, or the Jets or Patriots).

As far as Bush goes, he's making something happen that did not happen under previous cuts. He wants them enacted NOW. Not 5 years later. He originally did, but I think he noticed the mistake. Instead of raising your taxes so you can no longer feed yourself to cope with Washington spending, he'd rather reduce Washington spending so you can afford to feed your family. Buy groceries helps our economy too, you know. And if you have more money from tax cuts, you're more able to do just that.

Under Bush's plan, the average family gets around 800 dollars in tax breaks. The Democrats offer between 3 and 5 hundred dollars in breaks now, with nothing for long term ends to double-taxation (punishment) for making right decisions in life. So which do you prefer? Punished for right decisions, or rewarded?

It's simple, really. Under Bush's plan, you DO get more money. You get to keep more of what you earn (unless you pay no taxes, in which case you're already keeping all of what you earn). Under the Democrats, you don't get to keep that more money that you earn. You lose it to them, so they can try and get power once again.

[heldmyw]

I still believe that all this flap is based on the spurious premise that government is somehow able to control the economy.

Note I said &quot;control&quot;.

Influence, maybe. Not control.

Even though history may indicate what should happen, given the stimuli and indicators and whatnot, I don't see any of this as particularly effective.

Why?

In a word, confidence. The lack of faith in the present economic team, in corporate America, in business in general, in my job in particular, in local deficit problems ($2 bil defecit here in MI, how's yours?)... it all adds up to an enormous weight that no sleight of hand is going to cause to vanish.

One hears repeatedly that consumer spending is providing the only buoyancy in the economy. The only real movement of money and source of hope for the immediate term.

But it's a sad, almost fatalistic movement. Sort of like spending to buy sandbags and storable rations because you know the dam's gonna burst.

[Saber]

It's very possible that there is no one on the face of the earth at this very moment who knows LESS about economics than I do. I do have a question that has arisen today that I'd like a detailed answer to if anyone knows.

I heard that as part of the economic plan (or the extension of unemployment benefits http://gopusa.com/iB_html/non-cgi/emoticons/fire.gif ) that there is a provision for a type of account for unemployed people to use, personally, for job related expenses. It's for $3,000.00 and from what I've heard....if the &quot;unemployed&quot; becomes &quot;employed&quot; the next day after getting this account(?).....they get to keep whatever is left in the account as an &quot;employment bonus&quot;! Please....please...t ell me this is not true and I've been fed a hill of beans. I'm going looking around shortly....I want to know the details before I go to bed....or I'm going to be doing the toss and turn dance all night! LOL

[Terri]

Saber, go read the GOPUSA news story that I posted in Congress. It's titled Bush signs Unemployment Extension.

[Terri]

Here's a direct link to it. (http://gopusa.com/cgi-bin/ib3/ikonboard.pl?act=ST; f=7;t=348)

[BIG CASINO]

W's PLAN IS BEST!! NUFF SAID.

MOVE ON


Paddle forward, kids

[Saber]

</span><table border="0" align="center" width="95%" cellpadding="3" cellspacing="1"><tr><td>Quote </td></tr><tr><td id="QUOTE">W's PLAN IS BEST!! NUFF SAID.

MOVE ON
[/QUOTE]<span id='postcolor'>

I'll get movin' after I get more details. I just don't know what direction I'm goin' until then................ http://gopusa.com/iB_html/non-cgi/emoticons/peepwallA.gif

[Saber]

I don't know if my concern is technically part of his &quot;Economic Plan&quot; or his &quot;Reinstatement of Unemployment Benefits&quot; outrage, but I have gone to the article you linked to here Terri and made my &quot;not-so-happy&quot; comments. I'm &quot;moving on&quot; alright....... http://gopusa.com/iB_html/non-cgi/emoticons/fire.gif

[AngelsRWorldChamps]

</span><table border="0" align="center" width="95%" cellpadding="3" cellspacing="1"><tr><td>Quote (Saber @ Jan. 09, 2003 -- 5:42 pm)</td></tr><tr><td id="QUOTE">I'm going to be doing the toss and turn dance all night! *LOL[/QUOTE]<span id='postcolor'>
Its can't be true it would be a ghettos trashes christmas all over again.

[Terri]

Oh good, I've been trying to drag someone over there all day. I'll go read.

Big Casino, I agree that W's plan is the best and I like it. It's just the unemployment benefit extension or parts of it that I don't like.

[AngelsRWorldChamps]

</span><table border="0" align="center" width="95%" cellpadding="3" cellspacing="1"><tr><td>Quote (Reccos @ Jan. 08, 2003 -- 9:06 pm)</td></tr><tr><td id="QUOTE">.

Quite frankly, if I had to make the choice, I'd take the Dems plan over this one, as the costs are all in the short term and given that some significant money would go to states for homeland security measures and highways.[/QUOTE]<span id='postcolor'>
http://gopusa.com/iB_html/non-cgi/emoticons/uzi.gif The Liberals have a plan? That would be a frist.

News Flash thet Dems was to override HLS and anti terrorism laws, muts be the good
http://gopusa.com/iB_html/non-cgi/emoticons/uzi.gif a
http://gopusa.com/iB_html/non-cgi/emoticons/uzi.gif c
http://gopusa.com/iB_html/non-cgi/emoticons/uzi.gif l
http://gopusa.com/iB_html/non-cgi/emoticons/uzi.gif u

Pressuring them to do it

[Saber]

</span><table border="0" align="center" width="95%" cellpadding="3" cellspacing="1"><tr><td>Quote </td></tr><tr><td id="QUOTE">Its can't be true it would be a ghettos trashes christmas all over again[/QUOTE]<span id='postcolor'>

Well read it and weep BRISK......it IS true. http://gopusa.com/iB_html/non-cgi/emoticons/angry.gif

[agent758]

It looks to me like bush is using this to get what he wants. Just like the Lack of Campaign Finance reform bill. He signed it to take away an issue he has purposed the extension and unempolyment, and the fund to take those isses off the table so he gets the rest of the package or at least as much as he can get. http://gopusa.com/iB_html/non-cgi/emoticons/confused.gif

[Saber]

Meanwhile, the burden is once again on the taxpayer...only this time we get to pay out $3,000 new job gift dividends. *Yeah, he may have &quot;taken away the democrats issue&quot;, by having democratic legislation once again. *How is that any improvement over legislation presented by a democrat?

When I help elect a Republican, I expect certain principles to be upheld......like REPUBLICAN legislation! *Not bloating up the Education Department budget by 40%.....not Campaign Finance legislation...not $3,000 gift accounts via redistribution of wealth.... I expect enough moxie to unfurl the illegalities of the past administration....an d I expect a Republication President to follow his oath of office and defend the borders of THIS country....NOT Afghanistan's!

If I want democratic legislation....I'd vote for it. *Taking away democratic legislation and making it your own does not a Republican make!

Let's not forget for one second that he has a REPUBLICAN Congress now. I kept hearing....if he gets a Republican Congress he can really be a Republican and not have to &quot;compromise&quot;. Yeah.

[pRIMrose]

Saber ~ once again I'll add my &quot;ditto&quot;. http://gopusa.com/iB_html/non-cgi/emoticons/wink.gif

However, in regard to education, I did post an article recently about how Teddy Kennedy is now distancing himself from Bush because he doesn't think that Bush is holding up his end of the &quot;education&quot; bargain. I watched his speech on C-Span the other day and it sounded to me he is &quot;demanding&quot; accountability and testing or no funding.

If this is so, then it's a step in the right direction. If Ted Kennedy doesn't like it, it must be good for the country. http://gopusa.com/iB_html/non-cgi/emoticons/mdr11.gif I hope Bush sticks to his guns on this.

[Saber]

Yeah, I read that. Good for him. Turn Kennedy to stone. HOWEVER....the bloated budget is still in place. A Republican should be looking to DISMANTLE the Dept. of Ed and turn it over to the states......NOT increase its budget by nearly half!!!!!!!!!!!!!

[Granite River]

The liberal idea that a tax cut is government spending is like a store counting your change as an expense.

As we all know, the dem agenda is to make everyone so poor that they have to rely of the government to survive. And to this end they feel morally justified to tell any lie, distort any fact and do what ever it takes to gain power.

I don’t know that we need a stimulus right now but I think that Bush is playing his card well. The perception is that something needs to be done so he accelerates the tax cuts.

[navyblue]

Don't know if this is the place to ask this question, but I'll give it a shot.

Does anybody know if the proposed economic package includes a cut in the tax rate structure? *IE: The adjusted income where you change from 15% to 26% and vs/vs. *The only thing I saw was &quot;well if you are a family of 2, you will save X amount per year&quot; or &quot;if you have 3 kids in school, you will save Y amount each year.&quot;

*Some of us have long since had our birds flee the nest and are more interested in the tax rate structure. *

Anybody talked to thier tax preparer on this?