I recently wrote about the possibility of a second economic stimulus check, and whether or not it was a good idea. In my opinion, a second economic stimulus check is nothing but political posturing – a calculated move by Barrrack Obama’s campaign to solicit (read: buy) votes. But I love a good debate and I think the purpose of blogs is for everyone to have a voice.
A reader left a comment in favor of the Obama’s Emergency Economic Stimulus Plan, which calls for $50B to be given to individuals for relief from high energy costs, and another $50B split between the State Growth Fund and the Jobs and Growth Fund (a federal program). The latter two funds will use the $50B to pay for improvements to roads, bridges, and schools. Obama’s plan did not state where the money to pay for the State Growth Fund and the Jobs and Growth Fund would come from.
The $50B earmarked for individuals would equal $500 for single taxpayers, and $1000 for married couples or joint tax filers. It would be paid for over a 5 year period with “windfall taxes” on oil companies.
Would an extra $500-1000 help people? Surely. But I think there are better things that can be done with $50 billion dollars.
The reader comment is in the highlighted section below, and it is followed by my response (Here is the original comment). By no means is this meant to flame the commenter. This is strictly my opinion, and I welcome you to continue the discussion in the comments section.
As I sit here and read all of the folks that disagree with a second stimulus payment, I have but one question. Did any of you that dont seem to need that extra kickback, refuse the check, or donate it to charity? I know I benefited from it greatly. I dont live on public assistance, work my tail off to support 3 kids and the extra cash flow helped me pay some bills. Besides, if the United States can help other countries because thats our motto, why cant help each other? What ever happened to help our fellow man..some of you act like taxing a company thats already well beyond rich is such a bad thing. Why not have them give back to its own?
I commend you on your hard work raising your children. I have not been in your shoes, and I cannot pretend to understand what you sacrifice in order to give your children everything they need. That said, I don’t think a second stimulus check is a good idea for the economy. Yes, it would certainly help a lot of individuals, but on the whole, I think it would be detrimental to the long term health of our nation’s economy.
Refusing the stimulus check. I don’t think disagreeing with a first or second stimulus check has anything to do with refusing or donating the first stimulus check. I didn’t like the idea of the first stimulus check, but I accepted the money because at that point the government made a permanent change to the tax laws and it became my money. Just because I don’t agree with a change in a tax law doesn’t mean I should give away my money as a silent protest. That would accomplish nothing.
The emergency stimulus rebate is only designed for temporary assistance. Obama is proposing another permanent change to the tax laws in order to pay for what he calls a “4 month reprieve from high energy costs.” But if you read his stimulus plan you will see he plans to pay for a permanent change to the tax laws over a 5 year period. If it takes 5 years to pay for the first year of the permanent tax break, how will future years be paid for? More taxes will have to be raised to pay for this permanent change to the tax laws.
The problem with these permanent changes to the tax laws is that we are mortgaging our future to pay for a temporary solution. Sure, a couple hundred bucks would help most people, including my wife and I. But at what cost? This basically equates to using credit cards to pay for living the high life. Eventually the bill comes due and someone has to pay. That someone is you and me and our children and possibly their children.
What’s the big deal about levying a windfall tax on large oil companies? Because it taxes not only the oil company, but everyone who holds a share of that oil company, including people who hold shares of those companies in index funds, mutual funds, pension plans, retirement accounts, etc. This would include a lot of state, city, and government pension plans, as well as those belonging to millions of individuals.
On top of that, companies are in business for one reason: to make money. If the government forces additional taxes on oil companies, the oil companies will respond in kind by raising gas, diesel, and oil prices. It may be a few cents per gallon, but that eventually turns into a tax on everyone who drives or consumes anything that requires transportation to get from the point of production to the point of sale – including food, clothing, plastic and rubber goods, and other items.
I am also of the opinion that is it not for the US government to one day decide that a company makes too much money, so it should be redistributed to Americans. How can companies plan to run an effective business when the rules are subject to change at the will of a political party?
Note: The tax situation with the oil companies is extremely complex. There many tax credits, deductions, and other loopholes which allow the oil companies and other corporations to pay fewer taxes. I prefer to support tax reform to close these and other loopholes that affect many individuals and corporations before I would support taxing one or several corporations simply because a politician wants to make an example of them to garner attention and votes.
Can the US help its people and the economy at the same time? Yes, I think they can. But I don’t think handing out checks is the answer. The second part of Obama’s Emergency Economic Stimulus Plan calls for $50B to go to the State Growth Fund and the Jobs and Growth Fund. This would create jobs to repair roads, bridges, and schools, all of which need attention on both state and national levels. I believe creating jobs is a more permanent solution when compared to government handouts.
Unfortunately, I don’t have an answer for how to fund the proposed $50 billion bill. As mentioned earlier, I would much prefer closing corporate and personal tax loopholes and indiscriminately spreading the bill among many people and corporations instead of singling out a one set of companies and making them a political scapegoat.
In my opinion, a second stimulus check is nothing but a temporary solution to a larger problem.
Feel free to add your own comments – for, against, or indifferent.