A Tax Rebate as an Economic Fix? Are They Serious?

"That’s not tax relief..."

Again, this is semantics. It's certainly equivalent to tax relief (and this is how it will be described - correctly in my point of view).

Ok, but my point is that I don't think people getting a "waste this money" check will do anything. That's not tax relief -- it's a temporary diversion that does nothing to address the real problems.

I'm not an economist and I don't follow this closely, but I understand that there is a large body of economists that believe the Greenspan / Bush taxcut was at least somewhat to blame for the existing problems. If that were the case then it certainly wouldn't be a good idea to do it again.

It's amazing how many disagreements are about language. :)

When I was saying I didn't want to rely on other people for "everything", I didn't mean we should rely on others for nothing, I meant...not everything.

In other words, we need to be basically self-sufficient for those things that matter and tend to cause wars -- most importantly, energy. But I thoroughly subscribe to being economically entwined with other nations because it introduces dependencies that make it difficult to wage war against those other entities.

If country A sells 50 billion in widgets to country B then they're that much less likely to treat them as an enemy, and that's how it should be. As long as it's widgets and not heating oil for the entire country, because then it becomes a reason TO go to war.

OK. I was responding to:

"We should be self-sufficient and not depending on other countries for things like oil and say…everything we use."

I was really arguing with the word "everything." I don't see that as being possible or even a reasonable goal. I certainly agree that we should be as self reliant as possible for our core needs (food, energy, etc.). I don't think it's necessary that we become 100 percent self reliant, but that's certainly a good goal. Part of achieving this will be to reduce our appetite for energy.

But, we're getting off topic here. The question is whether a short term economic stimulus can prevent (or shorten) a recession. The deeper or longer lasting a recession is, the less money we have to invest in solving the dependence problem you're talking about. Though a potential recession may not seem like our biggest concern at the moment, the economy is part of the infrastructure that is needed to attack our other problems. So, preventing a recession IS a part of the solution to those other problems.

There's a big difference between isolationism and not being over a barrel for someone.

As far as your quote, I can tell you something that DOES cause evil -- desperation. And that's what we have with our current oil situation. Quite simply, any time we MUST have something -- and it's something we can't get enough of ourselves -- we then have to manipulate the system to get enough. And that's what we've been doing.

We have to eliminate those dependencies -- not so that we will no longer deal with other countries, but so that we can do so under HEALTHY conditions rather than unhealthy ones.

One cost of being entirely independent from the rest of the world would be a drop in standard of living (due to increased costs for manufactured items, etc.). In any case, I don't think this is the direction we need to head (and I don't see much support for such complete independence among Americans). I think that too many Americans seem to feel entitled to their standard of living (and to a continuing increase in standard of living, and to cheap oil, and to ...), and I think that this attitude needs to change. We need to learn to share the world with everyone else. One option is to turn inward and isolate ourselves from the world, but I don't see this as the best choice.

Finally, to borrow from a phrase I'm guessing you subscribe to: Dependencies don't cause evil. People cause evil.

@Carl

Which is the better effect? Losing manufacturing jobs or paying more for product? That's the wrong question in my opinion.

The threat here is not just losing jobs -- it's losing independence from external entities. We should be self-sufficient and not depending on other countries for things like oil and say...everything we use.

These dependencies, e.g oil, cause much of the evil we see ourselves committing.

Make the rescue package 2 trillion dollars.

Order the Federal Reserve to donate the money as a gift or lose their status as the Central Bank of the USA.

People in debt can pay off debt, others who have obtained and used their money wisely can invest it any way they want so as to not be unrewarded for their past diligence.

My understanding is that when they did the rebate thing some years back, most people saved the money rather than spending it. So, it didn't really work as a booster shot for the economy. (Which isn't to say that it wasn't helpful to people.)

In whatever form it eventually appears, what is being discussed amounts to a short-term tax-cut. That's all it is. While I agree with Daniel that the government is broke (hard to disagree on this one) and that we ought to be taking measures to correct this (or at least to prevent the debt from getting entirely out of control), one can impact the economy with tax policy. Lowering taxes during a recession CAN make economic sense. A corollary to this is that RAISING taxes during boom times can ALSO make economic sense. The ideal level of taxes is a shifting target (and the target is invisible, so nobody really knows where to aim). The fact is that if the tax rate is 0 percent, the government gets no money to spend on the things government needs to spend money on. If the tax rate is 100 percent, nobody would bother working, so the government also gets no money. The ideal rate (which maximizes the money the government brings in) is somewhere in between. Interestingly, to maximize revenue, a government needs a healthy economy, so there is an incentive for the government to do what it can along these lines. The Republican position is that the ideal tax rate is lower than it is now. During a recession, they may be right (probably are) -- and you will notice that Democrats are also in favor of a tax cut (in whatever form - Bernanke suggested that they be implemented quickly to help avoid recession, so that is what we will likely see). During prosperous times, I am always a bit skeptical with the Republican position that lower taxes are better. They always act like this is obvious. But, they do not give evidence that we are on that side of the ideal level. At any given moment, there IS an ideal level of taxes that maximizes the money the government takes in. This level is NEVER zero. So, there are at least SOME levels of taxation that are too low.

On the other hand (Kr0N), though we could use a good dose of infrastructure improvements, the situation is NOT the same as it was in the Great Depression. Unemployment is not particularly high at the moment. So, it isn't that there is a large number of people lining up looking for something productive to do. In 1930, unemployment grew from 3.2 percent to 8.7 percent. In 1931, it grew to 15.9 percent. In 1932, it hit 23.6 percent and peaked around 24.9 percent in 1933. It is currently at approximately 5 percent. We are NOT in the same situation.

Further (in response to the "How about we start making stuff again?" comment), it isn't clear that purchasing inexpensive products made outside of the US is necessarily bad for the US economy. The loss in manufacturing jobs on the one hand is balanced by lower prices for everyone on the other. Which is the more significant effect? It's hard to say.

While it is true that spending boosts the economy, the point is that relying on individuals to spend is foolhardy. They will either save the cash instead of spending or will spend on trivialities. What is needed is government spending on infrastructure and other public works projects. Go look up FDR.

Of course it's a stupid move economically speaking. It's a political move. You can fool some of the people all the time.

you obviously dont know squat abt economics. i m glad for the tax rebate.