Monday, January 21, 2008

Economic Stimulous or more money sitting in a bank?

--by Mike Adams

As Republicans and Democrats face off in Washington, our economy continues its downward spiral. Unemployment is on the rise, foreclosures are increasing and people are holding on to what they have for fear of near term scarcity.

The Washington debate centers on how best to spend our tax money in an effort to stimulate the economy. Both sides agree a tax rebate or some kind of monetary distribution from the Government would be beneficial. They simply can’t agree on who should receive that financial relief. Republicans argue that only people who have paid taxes should receive anything and that they can only receive as much as they’ve paid. On the surface this makes a kind of sense. It seems fair and equitable. The problem I have with that argument is not that it is a theoretically fair idea. Rather that it is short sited and essentially self serving (for Republicans).

Democrats argue that rebates and aid should be sent to low income individuals regardless of how much they have paid in taxes. To those sympathetic to the argument summarized above, this may seem like a modern day Federal Robin Hood. But actually, it makes good financial sense. When someone has had all of their needs met and they come into money during tough financial times, if they are prudent, they will save that money. By contrast, if we put money into the hands of those who are barely surviving, they will spend it quickly.

Therein lays the crux of the issue. We taxpayers are being told that our taxes will be used to stimulate the economy. For maximum stimulation, every cent contained in that stimulus package should go into circulation, rather than get hoarded. Obviously, the smart investment for stimulating our economy will be to place money in hands which will spend quickly.

My money definitely goes to the Dems on this one. I honestly think that Republican backers have already cashed in plenty on tax cuts for the super wealthy, special no bid contracts and other pork barrel options. It’s time this Nation do something to help its populace rather than its corporations.

One question I have about the Republican’s proposed package is whether several big corporate Republican supporters will receive a rebate despite their tax free status. The Republicans never seem to miss out on distributing wealth to their own backers whether they are US Corporations, off Shore Corporations or even untaxed entities. What is the plan here?