Friday, January 18, 2008

Who Benefits Most From An Economic Stimulus Package?

The more I think about the sudden urgency to offer up an economic stimulus package, the most I question the motivation.

Is it truly to help those in poverty as well as those in the middle class who are struggling?
President Bush plans to outline the basic principles of a proposed package of emergency economic measures just before noon on Friday, in an effort to restore the eroding confidence of investors and consumers. The package is expected to include more than $100 billion in one-time tax rebates for individuals and an opportunity for businesses to rapidly write off their capital investments.

We've had issues with poverty in this country for decades during which time we could have done far more to alleviate it. We've also had families with jobs who still struggle to make ends meet. Neither of these are new phenomenons. But only recently has the economy been addressed as a political issue in the upcoming presidential elections. To be sure, the housing crisis raised a lot of red flags and is causing many people financial distress who were relatively stable before the shit hit the fan.

But only when the stock market starts taking a beating and consumer confidence shows a downturn do we start hearing the politicians yelping about how something needs to be done, and quickly.

Pardon me for questioning the true motivation and what proportion of the incentives will ultimately benefit the corporate elite.

The homeless vets living under a bridge, or the family of four living on two minimum wage jobs are probably not giving a rat's ass about the Nasdaq. All this talk about helping those who are struggling seems like a thinly veiled disguise for keeping portfolios healthy.

Anything we can do to stimulate discretionary spending will certainly help to keep some CEOs earning a healthy salary. Because we sure don't want those folks being shown the door. How on earth would they survive on those meager severance packages?

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