What is the best economic move, politically?

Or more specifically, is a tax cut a tax cut when the citizen has not paid any taxes? The new stimulous package includes tax cuts, which are mostly targeted at citezens that don't owe any taxes. This seems to me to be more akin to welfare than a tax break. Since we are talking about a 1000 dollar tax credit for a family, that breaks down to about 80 bucks a month. That's not alot of extra spending money to inject into the economy.

This type of stimulous doesn't really seem to be a stimulous. It really does seem to be pandering to likely voters in the next congressional race. To me, this part of the stimulous will be no more effective than the last round of tax rebates, which econmist seem to believe didn't have a lot of effect. Most people used the money to pay down their bills. This money is already counted by major corporations when making their business projections. In short, these checks didn't stimulate any new economic activity- they just paid down the old.

So, that said, what would be better, politically? The Obama plan, A plan of meaningful tax cuts, just cutting a check for 3 grand to every American, or letting the economy run it's course. What would buy Obama the most political capital?

reply to post by GD


With the economy the way it is, many people would save the money. Saving is a good idea, because the banks would then use it to make more loans. The problem is too many people are out of work, and we need higher wage jobs. The construction industry is a way to get people back into the middle class.

Infrastructure spending is what the country needs anyways. The Republicans agree with that one, and one only needs to drive to a local bridge and see if there is rust on it or the road needs new pavement. The electrical grid is outdated, and has not been updated since the 1930s.

The government decides to rebuild bridges and give money to mass rapid transit systems. The bridges will need steelworkers and other construction workers. They will also need to buy raw materials, and the companies would need to order heavy equipment machinery. The owners of roach coaches would have new customers during lunch hour, and those small businesses would be back up and running. More support jobs would be added to support the maintenance jobs that were created.

On mass transit, many new passenger rail cars and buses are needed to replace aging systems (along with track and overhead wire overhauls). The companies that make rail cars and buses would get the orders, and they would hire workers to go to work making them.

While the government is jump starting the economy, the planners can work with the corporations to come up with a way for the private sector to get back on its feet. The government cannot do everything, and planning to see what is needed to fix the economy will help it in the long run.

The point is a stimulus that really works to revive our floundering econmy. Political capital for Obama is a very short-sighted and cynical way of looking at it.

The proposed tax cuts are aimed at the middle class, which does pay taxes, with some cuts thrown in for the rich because Republicans insist on giving to the wealthiest people in the country. Not that much of the stimulus is going to those who pay no taxes. One has to be very poor in order not to pay taxes, generally below $8,500 a year for a single person, with exceptions for those who get disability. This stimulus is not just welfare, even for the very poor; it is in fact one of the best ways to get money into circulation quickly.

It is important that as much money as possible goes into the economy as fast as possible. That's one of the major objectives of a stimulus. One of the best ways to do this is to give more buying power to the poor, who out of necessity must spend it quickly. Likewise the middle class is apt to use it to purchase necessities, like mortgage payments, car payments, etc.

The rich, on the other hand, are just as likely to stash their extra money away or put it into long-term investments or gold or even spend it on a trip to Europe or the Carribbean--somewhere outside of America. A dollar given to the rich is not necessarily a dollar back in circulation; it could very well be a dollar into a Swiss bank account.

Tax cut- Lowering the portion of taxes payed by a person or company

Tax credit- After being taxed, some of the money is redistributed to chosen people

The preferable approach is the tax cut. Credits are inefficient and take away from the total money in the hands of the people.

The term "tax cuts for the rich" is just rhetoric for discrediting an across-the-board tax cut. Since the wealthy pay most of the taxes anyway, why aren't they entitled to a percentage back just like you or me. Also, those that receive the money back, rich or poor, utilize the money improving economic growth.

The best economic move is not the best political move. Politics is about image, economics is about results. The problem with all of this is politics is controlled by people worried about the here-and-now with no regard for long term effects of their actions.
The ridiculous spending we have put into failed institutions has inflated the money supply and soon will pass the price increases to the common man, but at the same time, the government looks good because it is doing something with the intent to help now. While people have less money to spend, people losing their jobs, lending is down, savings are non-existent, and debt as high as it is, a dramatic increase in price could cripple the consumer, the economy.