Rebate checks sound great. Return money to the people who earned it, and they’ll spend it. That helps businesses, which benefits their employees:
"Letting Americans keep more of their money should increase consumer spending," Bush said.Get it? But there’s a catch:
Aids have said Bush does not believe the stimulus spending should be offset — or paid for — by any tax or spending changes elsewhere.That’s troubling, especially since the Democrats are unlikely to force Republicans to embrace a pay-go scheme. Indeed, it appears that we finally have bipartisan cooperation, albeit in the form of unchecked fiscal irresponsibility:
While Bush focused solely on taxes, Democratic and Republican leaders in Congress have been working on a broader package that also would include a temporary increase in food stamps and an extension of and perhaps increase in unemployment benefits.Q: If the government increases spending, and simultaneously rebates the tax money that pays for spending – what happens?
A: Deficit!
Worse than a deficit, increasing spending combined with decreasing tax revenue – all during a recession – will have a snowball effect. As the economy worsens the government will spend a larger chunk of GDP, which worsens the economy thus leading to more spending – ad paucitatem.
Extensions and perhaps increases in benefits cost money. That much is certain. The only question is when we’ll pay the bill.
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