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 I like the idea of a smart grid (our infrastructure is woefully out of date), improving mass transit options, developing renewable energy (since this will be more cost efficient than fossil fuels in the long run) and bringing our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:
- The Wall Street Journal breaks down who gets what from the economic stimulus bill.
- Frugal Dad laments the exorbitant cost of the economic stimulus bill.
- Free From Broke insists that government handouts like this discourage innovation.
- Personal Dividends explains why, in his opinion, the economic stimulus package is a disaster.
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?