Skip to comments.The Tax Rebate Was a Flop. Obama's Stimulus Plan Won't Work Either.
Posted on 08/06/2008 9:39:34 AM PDT by djsherin
Congress enacted the tax rebate program earlier this year because it perceived a growing risk of recession. In addition, it feared monetary policy alone would not be effective because of the dysfunctional credit markets. As American taxpayers know, most of the rebate checks have now been mailed and cashed.
Those of us who supported this fiscal package reasoned that the program would boost consumer confidence as well as available cash. We hoped the combination would cause households to spend a substantial fraction of the rebate dollars, leading to more production and employment. An optimistic and influential study by economists at the Brookings Institution projected that each dollar of revenue loss would increase real GDP by more than a dollar if households spent at least 50 cents of every rebate dollar.
The evidence is now in and that optimism was unwarranted. Recent government statistics show that only between 10% and 20% of the rebate dollars were spent. The rebates added nearly $80 billion to the permanent national debt but less than $20 billion to consumer spending. This experience confirms earlier studies showing that one-time tax rebates are not a cost-effective way to increase economic activity.
(Excerpt) Read more at online.wsj.com ...
This omits the stimulus effect of all the money paid to IRS workers for overtime. /sarc
As far as I can tell, the only way for govt to pay it’s bills, is by taxes or borrowing. I think tax rebates are foolish and borrowing against our kids futures, is reprehensible.
Next time, they should send a debit card redeemable only for things that people don't need, but will spend the money on because it's burning a hole in the pocket.
Act like an irresponsible tax and spend congresscritter, and boost the economy. Act like an adult and reduce debt, and you disappoint the ruling class.
WIth the Oil bills and college graduations I never even knew I got the refund till I checked my bank statement.
Yep. People had bills to pay, groceries to buy, and gas to buy to get to work.
What tax rebate? I didn’t get one...
I had hoped to bank mine, but it ended up going to new tires on my car so it would pass inspection.
You can always print more money and debase the dollar even further, which tends to happen a lot.
You need to get in touch with the IRS- unless you make too much money you are due a “stimulus” check for $600
So, you don’t want taxes cut?
Maybe we can compete with the Zimbabwe dollar...
Couldn’t agree more. I can’t wait till we get someone who actually understands and promotes Austrian economics at least as an alternative to the crap we have now.
I think the effect of the stimulus checks is hard to measure. Money is fungible, therefore if used it to pay bills, it frees other money to spend on stuff. The problem is maybe that the stuff, was what people would have bought anyway.
My check went into a money market account for future spending :-)
I do not like taxes anymore than anyone else, but I believe in paying our bills. We never get the spending cuts that candidates and politicians speak of, so what is left?
I think we can agree that ultimately spending is to blame and that the lowering of such is what is desired.
True, but we probably can also agree that it just never happens enough to make a difference. Usually, the only spending any party wants to cut, is the other party’s spending.
How could it possibly be a flop?
We bought a WII, with the pad. We are now improving our wellness and health with the daily exercise program that it promotes.
My Mii looks so much like me, I sometimes can’t believe it, especially when waving to the crowd in triumph.
I ski the downhill slalom nearly every day. No rebate, no skiing.
You must be one of the 10-20%.
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