A multi-episode plot of the classic sitcom All in the Family had Archie Bunker and his union colleagues on the loading dock staging a strike and demanding higher wages and better working conditions. When the walkout is finally settled, his son-in-law calculates that the agreed-to increase in wages will actually leave the workers behind the cost of inflation in just a few years’ time.Ever since then, I’ve tried to maintain a degree of skepticism about any financial agreement that concerns me — with the lone exception of not questioning a too-good-to-be-true deal on a 1970 454 V-8 Chevelle.
But I digress.
At press time, when President Bush was preparing to sign the much-discussed economic stimulus package, I began to envision a similar scenario to Archie’s union follies. The package looks fair in the short term, but other than many lucky couples finding tax rebate checks in their mailboxes, and providing some relief in this current crunch, I’m finding it hard to see any far-reaching benefits.
The bill provides a one-time tax rebate of up to $600 for individuals or $1,200 for couples, plus $300 for each child. Low-income people, including retirees on Social Security and disabled veterans who don’t pay income taxes, would receive checks of $300. The package also includes a number of provisions for business taxes, including one allowing businesses to expense more of their purchased equipment and assets in 2008, instead of depreciating them — raising the limit from $125,000 to $250,000. Additionally, it affords mortgage securities concerns Fannie Mae and Freddie Mac the authority to purchase home loans worth up to $729,750 — a sizeable increase from their current limit.
“We are in a period of economic uncertainty and we’ve acted again,” the president said. “This bill reflects our principles. It is robust, it is pro-growth, it stimulates business investment and it puts money into the hands of American consumers.”
I’m not so sure.
I always felt that it was a peculiar strategy for government to extricate itself from a situation in much the same way it got into it — spending and then subsequently borrowing to spend what many felt should not have been spent initially.
One of the theories behind this is that once the tax rebate checks are received, those in the low- and middle-income strata will in turn spend their newly gained windfall, and thus stimulate the economy. My question would be, wouldn’t those in the upper-income brackets spend it as well? And does this package address or, more accurately, bolster, an effective oversight program to avoid a repeat of this current financial storm? Because few would question that there are far too many root causes of the current financial and credit crisis to list here. And exactly how long will this rush of rebate spending stimulate the economy before old problems begin to re-occur?
Archie Bunker chortled that with a little patience, everyone “gets theirs in the end.” We can only hope that’s not where the stimulus package will get many of us.
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