Redstate

Posted at 1:56am on Jan. 21, 2008 On The Issue Of Recession-Stopping Rebates

By Pejman Yousefzadeh

Kevin Drum's idea of a rebate in the face of difficult economic times is as follows:

. . . Instead of, say, a one-shot rebate of $1,200, why not a monthly rebate against payroll taxes of $100 for 12 months? Add to that a 12-month boost to unemployment compensation, and you'd get a short term increase for everyone who works as well as for those temporarily idled by the recession.

Sure, a permanent increase might be psychologically superior, but knowing that you were going to get a steady stream of money for 12 months might prompt a little more spending confidence than a one-time windfall. Why not give it a try?

The problem with this suggestion is that it is only a temporary stimulus and it likely comes too late to do anything about difficult economic times; remember that most economic indicators are lagging and by the time any stimulus package takes effect, any recession that comes about may well be over and a stimulus such as the one Drum recommends will probably have no effect. Indeed, if this is the kind of stimulus that we are considering, it is far better to have no stimulus at all.

The curious thing about Drum's post is that he seems to ignore the very lesson he excerpts concerning the 1975 recession. Here is that lesson.

Read on . . .

Posted in Economy | Stimulus Packages — Comments (8)/ Email this page » / Read More »

Posted at 12:50am on Jan. 18, 2008 On Economic Stimulus

By Pejman Yousefzadeh

Let's face it: We are going to have an economic stimulus package because this is an election year, because the economy appears to be in a downturn and because no politician in his or her right mind would want to go to the voting public and proudly announce that he or she did nothing in response to the apparent economic downturn.

Actually, let's amend that last part. If politicians were in their right minds, they would dismiss calls for a stimulus package. Russell Roberts explains why. (Via Free Exchange.)

Posted in Economy | Stimulus Packages — Comments (16)/ Email this page » / Read More »