Wednesday, January 30, 2008

Where’s My Rebate Check?

For the second time in his presidency George Bush has had to provide an “economic stimulus” to the failing economy. When will these clowns get it? These short-term band-aids will not fix a broken economy. These rebate checks are just a way for the politicians in Washington to be able to accept their checks from the lobbyists without guilt. The truth is just like the last rebates they will do little to rescue an economy that has inherent flaws. Rather than do the hard work needed to create a working economy, the Washingtonians have opted for a symbolic gesture designed to appease the masses in time for the fall elections. It is a win/win for both parties and a loss for the American public.

The economic research on effective stimulus is quite clear on this point: there is a greater bang-for-the-buck from rebates targeted at lower-income households than higher-income ones. As the Congressional Budget Office put it in a recent report:[PDF] "Lower-income households are more likely to be credit constrained and more likely to be among those with the highest propensity to spend. Therefore, policies aimed at lower-income households tend to have greater stimulative effects." Given the well-documented increase in income inequality in recent years, excluding low-income households from the rebate also fails on the criterion of fairness.[1]

Rather than deal with the rampant corporate greed that has fed this recession, it is easier to hand out a few hundred dollars in hush money to the electorate while the fleecing continues. Let’s compare the “stimulus package” being offered up by Washington with the profit package that the corporations have been enjoying the last 8 years.

Since 2001, he noted, overall corporate profits have doubled, to more than $1 trillion. Contributors to that gain include a cumulative $440 billion increase in investment, a $375 billion expansion of budget deficits and a $140 billion decline in household savings. The only negative during the period was a $405 billion widening of the trade deficit.[2]

The proposed stimulus package totals 150 billion dollars while the corporate profits are over a trillion dollars, is it just me or is there a small discrepancy here? Are we to believe that a $600 check is going to off-set the unprecedented growth of wealth and profiteering that is taking place in America today? The increase in the price of gasoline alone amounts to more than what is being offered the American public. Many economists believe that one of the main problems with our economy is the lack of savings, so what are we suppose to do with our rebate checks? Go out and spend them to generate more profits for the corporations. Why not just continue to give the money directly to the corporations and avoid the middle-man? So remember when those checks start to arrive in May or June you will be counted on to be a good little American and go out spend that money. Go buy yourself something nice, you really deserve it. Maybe it will help you to forget how truly bad the recession is and how worse it is going to get. Maybe it will help you to forget all your fellow Americans who are being evicted from their homes or who are still patrolling the streets of Iraq. Maybe it will help you forget all those millions of Americans who were forgotten in the negotiations; the unemployed, the food stamp recipients, and the seniors.

Yeah $600 is a pretty small price to pay for silence. I know it’s hard to say no to free money, but this money isn’t free. It will be directly added to the budget deficit which is currently hovering around 9 trillion dollars, so what’s another 100 billion? Our economy needs help, but not these onetime symbolic gestures. The time has come to make some much needed changes that will require making some difficult decisions. I just don’t see the political will or the populist surge to make it happen. So we will take our checks and continue to ignore the giant elephant in the room until there is a total collapse and then everyone will wonder what happened? What happened was that our infinitely expanding economy finally reached the limits of greed and corruption and rammed into the glass wall.


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