Saturday, January 26, 2008


Not only does a large part of the stimulus package go to groups who are unlikely to spend it, but by the time they send out the checks any recession would be half over. The idea of sending rebate checks is to bring things forward from the time when people file their tax returns for 2008 in 2009. But here are two quicker methods of getting a fiscal stimulus out there:

1. Allow reduced with-holding of taxes from wages in anticipation of a tax rebate. Workers would instantly get a rise in take home pay.

2. If you have a national sales or value added tax you can slash the rate immediately reducing prices and increasing sales (supply curve moves to the right). The US doesn't have this option of course except for some federal taxes like that on gasoline.

Any problems with these policies?

1 comment:

Anonymous said...

Recesion???? All of this is just a short term fix. And truth be told, it has been happening over past 3 decades. Reagan and Clinton have just as much blame as the current administration. This is an interesting perspective on this(the midas touch) just another reason i feel sorry for who ever the next president is por mr or mrs next president