Herb’s bright idea to stimulate the economy
January 25th, 2008 at 12:16pm Chuck Sweeny
The economic stimulus package deal agreed to by President Bush and the Democratic leaders of Congress won’t have an immediate impact because it’s going to take the bureaucracies of Washington months to calculate the tax rebates.
They’ll have to write the self-congratulatory letters from Bush, Speaker of the House Pelosi and Senate Majority Leader Harry Reid, get the envelopes stuffed and mailed by the United States Postal Service and into our mailboxes.
That should happen sometime in August, September or, who knows, October? That would be in time to make us feel good about our government in the last few weeks before the November election.
If they really wanted to stimulate the economy, Herb Allen of Main Street Financial Group in Rockford has a suggestion: just reduce the payroll tax. They could do it immediately. It would pump billions into general circulation overnight.
No letters or checks required.
Herb is logical and smart. (Full disclosure: He’d better be smart. He is the guy who invests my money.) It makes perfect sense to do the simplest thing that has the most immediate impact.
But politicians aren’t like Dr. Herb. The first thing they think about is themselves and their re-election chances. Or, in the case of “W,” his legacy.
Politicians like to make it look like they’re doing something, while in reality they won’t do anything. In our fractured republic, politicians like to keep the problems going so they can continue to blame the other guys for blocking progress. That’s the way they get re-elected.
So, they’ll send out cheery letters that tell us how responsible they are, along with the checks that won’t do anything to stimulate the economy.
Ain’t that America, Mr. Mellenkamp?
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1 Comment Add your own
1. Herb allen | January 26th, 2008 at 9:24 pm
Hey Chuck,
Thanks for the most gratious comments!
ok, here is the problem from my point of view…In 2001 President Bush mailed most of us rebates to kick start the economy. The data says it all…only 40% of us actually spent it on new stuff which did stimulate the economy. The rest of us saved it,lost it,never cashed it…you get the idea! None of those dollars helped at all.
This year the average family is much more worried about the economy and the health of the family budget. Why? Well 401k becomes 201k and the family mortgage has become a challenge for millions of Americans. The expectation is that a much greater percentage of folks will save the rebate or pay down debt. Please note that as a financial advisor, these choices would be my chief recommendations in any case. The cruise or the next new thing in audiovisual stuff can wait till life is a bit more predictable…Don’t you think?
So,any federal give away will cost us more than we imagine in increased rates of inflation, higher taxes and a hefty move in the Federal deficit.Given these facts , why not be more creative and skip the very politicized mail gram of cash?
I was thinking of an immediate reduction in payroll taxes (let the reduction equal the value of the rebates), a refocused rebate for Senior Citizens who are not on the payroll, and increased food stamps for families and individuals who are living in poverty. Why not add an increase in jobless benefits for the truly unemployed who are still seeking work? This strategy puts more cash in the paychecks of folks who will more likely spend THAT kind of money and will also give a push to business as well. A short term adjustment in payroill taxes and the other more carefully focused infusions of cash will get our economy moving before we stall out and go flat.
While we are spending our childrens money, lets have the Fed lower rates another point right away…huge stimulus to the investment community, a clear sign to the world that we are serious and capable of taking care of ourselves…thank you!!
And one more thing….lets have congress and the Justice department go after the Predatory lenders who have pushed us over the edge with their greed and evil abuse of new and unwary homeowners. Ok…one more thing, this wont do anything to our budget or our deficit…lets have the federal government go after the abusive trading policies that make life for the average retail investor almost impossible…
Ok, well thats what I think right now about the economic recovery plan.Of course, I am not running for office and neither are you..are we lucky or what!!!
Its the civil conversation, the reflective thought of growing numbers in theRepublic that will keep us from mailing out virtual toasters and dishware attempts to protect the Free Market Economy of this compassionate and decent country.
Go USA!!!
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