Wednesday, February 20, 2008

The Real Price of Economic Stimulus

As an early valentine to the entire nation, George W. Bush recently signed a $168 billion economic stimulus package. About $110 billion of that payout will go to individuals and families, in the hopes that folks will go on a patriotic shopping spree with their surprise buckage. So, courtesy of Congress (and your tax dollars), millions of working Americans will be the recipients of hundreds of dollars in tax rebates right around Mother's Day.

But, really, how is this fiscal package going to affect us? And can it really provide a much needed boost to our faltering economy? My friends at OMB Watch have boiled down all the particulars into a user-friendly chart that will help everyone figure out if they should expect a check and just how fat that windfall might be.

The economic stimulus measure represents the largest legislative package ever passed in an effort stem an economic slowdown. Much political energy and capital was spent to push the measure through. Bush and House Speaker Nancy Pelosi even put down their dukes long enough to agree on this one. But can the bill really deliver on all that it promises? According to OMB Watch, the weighted value of the package comes out to about $160.4 billion, or $7.6 billion less than the actual cost of the total package. As a result, in OMB-Watch-ese, the "package can be expected to yield slightly less in short-term consumer purchases than it removes from the economy in the long-run in terms of additional debt, and considerably less when interest expense is factored in."

Ugh. In other words, or Zaftig-ese, not only does the economic stimulus package not do the trick in terms of stimulating the economy, it's going to cost us in the long run. Why? Because we have to borrow the money (from China?) to hand out all those checks, and pay the interest on the debt the nation incurred during its collective field trip to the mall.

For my money, as I wrote in an earlier blog, if you want long term economic stimulus, Congress should take a long, hard look at pay equity issues -- and remedies for the lack thereof. The Ledbetter Fair Pay Restoration Act (S. 1843) -- a bill the House has already had the good sense to pass months ago -- is still languishing in the Senate. The bill rights the Supreme Court's wrongheaded, unrealistic -- okay, I'll just say it -- dumb ass decision in the case of Ledbetter v. Goodyear Tire and Rubber Company. If you really want economic stimulus that sticks to your ribs, write your senator today and tell them it's time to pass this bill. Tell the Senate that then -- and only then -- will you spend your rebate check. Happy shopping, folks.

Some Additional Info from the IRS:

How to make sure you get your rebate check
Facts About the 2008 Stimulus Payments

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