Friday, January 18, 2008

What would you do with $800?

I awoke this morning to news of the potential of an economic stimulus plan that would involve sending money our way. It could be as much as $800 for a single person, or up to $1600 for a couple.

Of course the details still need to be worked out. The political parties need to come together. There has to be some agreement. But hey, we could get a little tax refund, and then a tax refund advance. Cool!

OK, so what could we spend it on? We can't just save it. We've got to spend it. After all, it's an economic stimulus plan!

Maybe we could get a nice HD TV with it. That would help stimulate the economy.
Or how about a new iMac?

We need to do some little things around the house. Maybe a new garbage disposal. Oh yeah!

Paint. We need to paint some stuff around the house.

Curriculum. There's always something one of our kids could use to further their education.

A vacation. YES. We could make a nice trip with that! Now THAT would help the economy, wouldn't it?

But wait.

Is this a good idea? Not the vacation, the dispersion of dollars on families throughout the land. On the one hand, yeah, we wouldn't mind a little financial windfall (is there any other kind?) for our family. But from a macro-economic perspective, is this a good idea? What will be the long-term consequences?

This is probably like what a child must feel like when they fall and hurt themselves very badly or something and we attempt to pacify them with a lolly-pop. We can name more things that a wrong with the country's economic state than we can name that are right: The weakening dollar; The sub-prime mortgage crash; The lowest housing starts in years; The imbalanced trade deficit; The rising federal debt; The insurmountable consumer debt, etc, etc.

So does anybody really think handing out a few dollars to people is really gonna help? Proponents would argue that this same action in 2001 is exactly what it took to pull us out of a rising recession. But the circumstances this time around are quite different.

Federal Reserve Chairman Ben Bernake said "Fiscal stimulus that comes too late will not help support economic activity in the near term, and it could be actively destabilizing if it comes at a time when growth is already improving," Who has the wisdom to discern if this short-term solution to an economic downturn is timed correctly, will yield the desired results, or even substantial enough to matter?

Thank you, I would like some cash, but no thank you, I don't think this is going to do our country any good. Are most Americans going to feel the same way or will they just thank Uncle Sam for the "gift." We'll pay for it one way or another.