[Flafurs] Economic Stimulus checks and what the government may notwant you to know about them.

[Rassah]

From: Xan Steel
Sent: Tuesday, February 12, 2008 4:32 PM



<SNIP>Tax rebate stuff</SNIP>

 

I remember the last time we got these rebates. They were passed, along
with some not so well known cuts in tax spending that would go to the
states. So, up here in Maryland and Virginia, we ended up getting rebate
checks and small tax cuts, but then the states realized that they won't
be getting the money they need to fund their schools, fire, and police
departments, and had to bring up their taxes to cover the difference. In
e end, he state taxes ended up costing about as much as what we
supposedly saved in tax cuts and rebates, and Virginia's school system
was in quite a pickle for some time. I wonder if they're planning on
paying for these rebates with some more tax spending cuts this time,
too? 

 

And if they're not, don't let them convince you that deficits don't
matter. Running the government at a deficit means that the government
has to borrow money every year. Every time it borrows money, the amount
of money available for loans shrinks, and supply-demand dictates that
decreasing supply would bring up costs of the item demanded, which in
this case means the interest on the loan. Each new government loan will
have a higher and higher interest, which is bad, because it will
eventually (or now) make it more difficult for normal businesses and
corporations to raise money. People wouldn't want to bother investing in
businesses and startups at, say, 4% return, if they can easily get that
investment without any risk by lending money to the feds in the form of
government bonds and t-bills. Eventually this may be 6% or higher.
Deficit spending crowds out economic growth, expansion, and venture
capitalism. And I won't even bother going into how it screws with
inflation. The feds f'ed up, but I think their plan to buy us off as it
were is going to only make things worse.

 

n  Rassah

 

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