It's the stupid economy

I agree with Jason with the premise that increasing spending (i.e. demand of consumer goods) would increase supply and therefore create jobs and prevent or mitigate a downturn in the economy. However, a general tax rebate is not the best way to do it. I agree with columnist Dave Lindorff and economist Bruce Bartlett that because a rebate is not a permaneant increase in income, people's spending habits will not change. I'm sure some people will buy a new TV with the rebate, but I think a larger number will save it or use it to pay down debt (something that won't help stimulate the economy at all) because their base income hasn't increased.

Micah D. Bobo, small business owner @ 12:34 PM PST, Jan 31, 2008

See Economist Brad Delong's blog: Obama's plan looks pretty good: The plan is clean: there is no place for lobbyists to hang ornaments on it--which means that quick passage is possible. The first $45 billion of checks could be cut and sent out with this April's tax refunds. It meets Elmendorf and Furman's requirements that a fiscal stimulus be timely and temporary. John Edwards's and Hillary Rodham Clinton's plans look, to me, likely to be less effective. This from a guy who worked in the Clinton administration for 8 years.

Ronald Loui @ 12:05 AM PST, Jan 29, 2008

Keynesian theory does have some validity but I'm not sure a tax refund check will be a panacea for the current situation. Milton Friedman believed that tinkering with the economy can actually make things worse. Maybe everyone will use their money to buy gold and drive the economic downturn even further like what happened in the 1920s... That said, I don't agree with Steven. I do believe that the people who receive tax refunds (call them loans or whatever), will spend their money and continue to work. I don't know a single person who could stop working because they got a $600 check.

Kevin @ 11:28 PM PST, Jan 28, 2008

It is clear that the trickle down economics has led America down a path that looks increasingly perilous. These bandaids are not going to work, we must bite the bullet and be prepared for a long pending reversal. Folks, why don't you get it, the account is overdrawn. It is time again for Americans to start saving real money and make-do with less. Until the fundamental problem (living beyond the means, both at individual level as well as institutional one) is fixed, the problem will only get worse by symptomatic treatments. Ravi

Ravi @ 8:38 PM PST, Jan 28, 2008

Steven Landsburg is an idiot. Leaving aside his refutation of Keynes --very few of us work only 40 hours per week. Where has HE been?

Tim Connor @ 7:37 PM PST, Jan 28, 2008

We don't need a stimulus package, we need a reality check. Americans can't keep spending more than they earn and still keep a high standard of living. I don't qualify for these rebates, so I'm protesting by spending less, no longer donating money, and putting my savings in my 401K.

Kathry @ 6:49 PM PST, Jan 28, 2008

One travels through Asia and sees bright, shining, new, well-run airports in cities like Singapore, Hong Kong, Taipei, Kuala Lumpur. The 21st century is looking more like Asia's century than America's. America's airports are a shame - dirty, shoddy, crowded and poorly maintained. I'd rather see our government spend my $600 toward building new infrastructure. The proposed $150 billion stimulus package would do much to improve our decaying airports while putting people to work. Sending people a check is misguided. What will we do with it? Spend the money on more imported goods from China?

Claudio @ 5:49 PM PST, Jan 28, 2008

i don't think i'll get anything because i made too much, but if i do i'll put the money toward a plan i already have for this year. i've recently learned that some kitchen appliances made by LG are actually made in NEW YORK. i plan to replace all of my kitchen appliances this year with American Made stainless steel appliances. the American made appliances are all very high end which is what i'm looking for. i'll pay top dollar for a good product especially if it will put an American to work. GO LG!!!

chris @ 5:34 PM PST, Jan 28, 2008

A thriving economy needs 3 things: consumers consuming, workers working, and investors investing. Lack of any of the 3 can cause a downturn, but when the modern U.S. economy slows down, it is usually because of a lack of investment, not a lack of consumption. The last thing the economy needs is $150b of additional gov bonds, draining more money out of the capital markets to give a handout to consumers, when consumer spending is doing fine. We need to reduce the deficit to free up investment for the private sector to expand business and create jobs, giving the workers a paycheck to spend. Supply creates demand, not the other way around.

Anonymous @ 5:00 PM PST, Jan 28, 2008

I am still looking for a Roosevelt type of work stimulus. A huge public works pakage that puts people to work with stable income. We do not need a measely $600 check. Americans love work and a steady income.

Tony Suzuki @ 4:23 PM PST, Jan 28, 2008

Next