by Damozel | Lawmakers are rushing to pass measures to stimulate the over-stressed, tired, anxious economy, which is in one of its periodic fits of malaise that looks as if it may turn into a recession, in case it hasn't already.
The discussions involve an economic stimulus plan of as much as $150 billion in corporate investment incentives and personal tax rebates....The Federal Reserve this week cut its benchmark overnight lending rate by three-quarters of a point to 3.5 percent. (Yahoo News; links in original)
Well, that's good news for all the people who already have money. I guess that's only fair, since our economy is only stimulated by money. Just that sort of gal. .
Congress is in a hurry to get the measure passed.
The proposals under consideration -- tax rebates, incentives for business investment and increases in unemployment insurance - - won't have the desired effect if they are delayed, economists said. And if lawmakers load the package with pet proposals or make it too much more expensive than the $150 billion figure under discussion, it might backfire by boosting inflation or the deficit, they said. (Yahoo News)
Meanwhile, Republicans are "cheering" the fact that it is "tilted" (mark that) "toward the taxpayer" without putting any money into the hands of undeserving poor people who couldn't stimulate the economy if they tried. They are happy that the deal doesn't include “extraneous spending” on unemployment benefits, food stamps, or infrastructure projects, which some Democrats had said should be included in a stimulus package. (NYT)
The unemployed and the poor apparently have Nancy Pelosi to thank to thank for this. "Ms. Pelosi agreed not to include two proposals that had broad support among Congressional Democrats: an extension of unemployment benefits and a temporary increase in food stamps."(NYT) But there is a bright side:
In exchange for those concessions, the Bush administration and House Republicans agreed that the stipend of at least $300 would be paid to all workers receiving a paycheck, even those who did not earn enough to pay taxes last year.
“The vast majority of low-income people are going to get a minimum of $300,” said a White House official familiar with the outlines of the accord.(NYT)
Well, that should cheer them up. A whole $300! That's nearly 1/3 of a month's rent and---say--- three and a half weeks' worth of groceries, provided you aren't very hungry.
Paul Krugman, for one, doesn't care much for the economic stimulus package.
As I pointed out in an earlier post, economic theory — Milton Friedman’s theory! — suggests that if we want stimulus funds spent, they should go to people in temporary economic difficulty who are likely to be liquidity-constrained. But it appears that most of the measures that would do that — benefits to the unemployed, food stamps, aid to state and local governments — are being bargained away. Even the tax credit is apparently not fully refundable, so those who need it most, and are most likely to spend it, won’t get the full amount. (NYT)
I know, I know: many write Krugman off as just a big ol' liberal hippie progressive. But he's a big ol' liberal hippie progressive who just happens to be an economist who has published several hundred articles and who has taught at Yale, Stanford, MIT, and Princeton.
I somehow doubt that many of the people who put this deal together can match his credentials on this issue. Furthermore, his forecasts seem to be right a great deal of the time ("Housing Bubble").
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