House Passes Economic Stimulus Bill: I Am Not Amused

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Thu, Jan 29 - 10:02 am EDT | 6 years ago by
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Last night, the House passed its economic stimulus bill, sans Republican support. Quite honestly, I am disappointed. Mainly because the few really good ideas in the stimulus bill have been completely watered down by a bunch spending that does little more than perpetuate that status quo of throwing money at the problem. Of course, the economic stimulus bill battle isn’t over yet: The Senate is working on its (more expensive) version, and there will have to be a reconciliation version to bring the two versions together.

Not that anything is really going to make a big difference. At this point, what’s another $800 billion or $900 billion? Or even $1 trillion? We’ve already spent more than $7 trillion on economic stimulus — most of it going to “rescue” banks and other large institutions.

So, what’s in this stimulus bill?

Simply put, a great deal of spending that is likely to turn out to be ineffective. Here are some of the highlights of the economic stimulus bill — and what I think of them:

  • Taxes: Homebuyer Credit. There will be tax benefits. First of all, that $7,500 first time homebuyer credit that was supposed to be repaid, no longer has to be repaid. That’s nice. They should retroact it to 2007 (so I get the credit for my home) and expand it to include any homebuyer and anyone who refinances.
  • Taxes: Cuts. The other big tax thing — included as a sop to the Republicans who didn’t vote for the bill — was a tax cut. I think the tax cuts are a horrible idea. First of all, these tax cuts are not big enough to make any real difference. Is $500 or $1,000 going to prevent anyone’s foreclosure? No. And, because this tax cut is spread out over two years, and in the paycheck, it amounts to around $20 or $40 per month. Is that going to change your household budget dramatically? These tax cuts do nothing to advance the stated goals of preventing foreclosure and increasing consumer spending. Secondly, taxes will have to be raised again — just as we the people get used to this nice tax cut. Seriously, on a political level, down the road this is suicide.
  • Infrastructure Projects. I like these. I like the idea of a smart grid (our infrastructure is woefully out of date), improving mass transit options, developing renewable energy (since this will be more cost efficient than fossil fuels in the long run) and bringing our technology up to date through expanding broadband services. These things will provide new jobs and allow more people access to the global economy. Unfortunately, these measures are only a small portion of the economic stimulus bill.
  • Schools. I think education is important, and the money spent on secondary and higher education should (if properly directed) be money well spent.
  • Bank rescue. It’s not really in the economic stimulus bill overtly, but you know more money is going to be thrown at banks through TARP and other channels. Timothy Geithner has promised to make banks rescue a priority, and I’m sure the continues costs of economic stimulus will be seen in emergency loans and what-not. After all, we didn’t spend more than $7 trillion so far through massive stimulus packages. Most of the economic stimulus will be spent a little here, and a little there, effective masking the true expenditures from the American public.

Honestly, and I’ve been saying it for months now, if our government is going to spend our money (and it will) and if we’re going to pay it back (with interest), they should just give the money directly to us. If economic stimulus had originally been $500 billion for infrastructure and other projects plus a nice fat payout for each household (not person — household) in America, many of the stated goals of our leaders would have been met. And it would have cost a helluva lot less. Foreclosures prevented. Credit card defaults prevented. Consumer spending through the roof. A possible foundation for a less extreme economy built on saving (although that might be a little too much to ask for). An individual economic stimulus would have put money back into banks and benefited the American people directly. It’s our money. Give to us and let us spend it as we please. Even Jon Stewart sees the merit in this:

But it is not to be. Everyone talks about the merits of tax cuts v. government spending on big projects, but the bottom line is that for the economy we have, and for the goals our leaders have stated, neither is very effective option.

Here is some more information on the economic stimulus bill:

Really, about all you can do at this point for your personal finances is put together a budget, live in a frugal manner, and choose careful investments to beat inflation (because printing this much money is going to cause craaaaaazy inflation).

What do you think of the economic stimulus bill?

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  • Jared

    I agree on all fronts. I guess there is a risk of people “mis-spending” that money, but there is a risk the banks, etc. will too.

    Consider this: What caused the banks to get in trouble in the first place? It was the inability for the consumer to pay on their debt obligations. We can spend all this money on the banks and corporations, but the consumer (STILL) cannot spend/borrow/save. The root of the problem still exists.

  • miranda

    You make a good point, Jared. Besides, the banks have already misspent the money in a way that has not been helpful to the economy. Might as well give it to us to misspend. I suspect that most people would clear out what debt they could. Just giving it to folks would accomplish the stated objectives of our leaders better than anything else.

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  • Sarah

    Excuse me for saying, but you sound like some rich asshole. $40 extra a month will make a great deal of difference for me and most people who make under $30,000 a year. As for the stimulus, I fully support it! With it many people will be able to “catch up” on their immediate debts, which I know will persoanlly ease quite a bit of stress during this difficult economic time.

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  • miranda

    @Sarah: I’m sure that the tax cuts will some of difference for some people, but it won’t really accomplish the goals of the stimulus package. Additionally, what will happen when the taxes go up again? And at some point they will. It will be even harder for those folks because they will have gotten used the extra money.

    Anyway, my point is that if they were going to do tax cuts they should have made them bigger, or done the money at once. But what I really believe is — if you’ve read my entire post — that every household should get a big payout. Personally, I think it’s our money and since we’ll have to pay it back anyway, a pat on the head tax cut isn’t enough. They should give every household between $15,000 and $75,000, depending on income. Giving us the money would actually cost less and do more.

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  • James

    I agree with a few items in the bill as you do. Education is in dire need of a financial makeover. Bank rescue is no longer a necessary thing. Earlier this week one of the financial banks that received money tried to purchase a corporate jet.

    I don’t think throwing money at the issue is a good idea either. It has proven time and time again to be ineffective and our growing debt is becoming even worse. In regards to the tax cuts, I don’t think that they are intended to be used to pay off mortgage debt, but to be spent on consumer goods. This doesn’t mean that I agree with it, though. This is because we will continue our deficit spending in this turbulent economy. Not good :(

  • miranda

    I agree, James, that all this debt-fueled spending will catch up with us eventually. The thing is, that leaders have specifically talked about how the tax credit would help prevent foreclosures and increase consumer spending. The way they are administering the tax cut won’t really make a big impact on either.

    While I don’t agree with all this spending, our leaders are bent on it. It would be cheaper — and achieve stated objectives — just to give Americans the money. The way they are going about things, there will be more and more money thrown at the problem — without any real progress made.

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  • Gramps

    I can see some merit in the proposition of “give it to us and we will spend it”. However the only economy that would benifit from that proposition is that of China and of India. Our problem is not so much not having money to spend,i.e. unlimited credit card debt but the fact that we do not have a viable goods and services base in the U.S. any more. It is not simply enough to have money and credit but we must also have the ability to produce enough jobs for people to be able to earn what they spend. For too long now low tariff rates and off-shore banking acitivities by American Corperations have led to the loss of the country’s ability to provide enough viable industry to sustain the working class here. A little less Toyota and Honda, as well as Walmart’s China conection and India’s electronics help lines might provide a few more jobs for our good citizens. The cheap cost of production of goods in foriegn countries has not been passed on to the U.S. consumer. We have been suckered into thinking it was a good deal by the advent of easy credit!

  • miranda

    Thanks for weighing in Grandpa! I really think that many folks would actually pay down their debt — credit cards and mortgages — if they had a substantial payment. I’d rather see us have it than the banks, anyway. The trickle down approach that has been followed hasn’t been working so far — $7 trillion later.

    I do agree that more jobs are needed here, which is why I like the parts of the economic stimulus that provide for infrastructure improvement, education (although I think there should focus on trade and skills training as well as college training), and renewable energy.

    I agree that, unfortunately, we do way too much consumer with easy credit, and not enough producing from our stores of innovation and productivity.

  • usd6

    This is a very good article, thank you!

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  • kelly

    I am not in support either….although I am not American. I mentioned your blog entry and a few others who do not have good vibes about this. There’s only a few hours to it being passed by Obama!

  • miranda

    There are some good things in there, but there are also some things that aren’t particularly helpful. And I am not a big fan of just throwing money at a problem. But the current version of the bill is less expensive by tens of billions of dollars, so that’s better, I guess. I don’t like that they cut some actual stimulus stuff (job creation) and left in some useless stuff.