Rebates can’t stop a recession
A tax rebate of $300 to fight the recession? Really? An unimpressed “thanks” is the best the government will get from me. In the hands of college students, $300 will last all of two weeks. Instead of cutting checks, they should pay attention to the primary concerns of most consumers: gas and food.
But wait. If you did not make more than $3,000 dollars during the 2007 tax year, then you do not get any money. Upset now? Good, let’s continue.
Whenever I hear a discussion about economics or the stock market, I generally black out and wake up at the end of the conversation. This is a common defense mechanism to protect my brain from the catastrophic damage it would undergo if it actually tried to process markets, trade and inflation.
That said, I will try to explain this whole tax rebate and recession deal with the view of a candid outsider who does not understand the economy. Why trust an uninformed outsider? I wonder why many would rather trust insiders who will only feed you their political agenda reprocessed into unintelligible economic gibberish.
Congress will be voting in the next week on whether to pass a $150 billion economic stimulus package. Single Americans who make between $75,000 and $150,000 will receive $600; $1,200 will go to couples, with an additional $300 for every child. Workers who do not earn enough to pay taxes but have earned more than $3,000 will receive roughly $300. Don’t fret; no one is getting paid until May or June. By then I cannot imagine how much gas will cost – maybe $3.20? Prices always skyrocket in the summer; we might even see $3.50 or $3.75.
This does not affect me – and it certainly doesn’t do anything for any students I know – which gives me all the more reason to fume about it.
Gas is more than twice as expensive as it was five years ago. Food prices are rising along with the cost of fuel for shipping and the resulting increased price of corn for ethanol. Instead of addressing these issues, Congress is throwing money at people – and it isn’t even that much. I equate this to giving someone CPR for a stab wound. Congress ends up looking like idiots, and we feel a little less human.
What is even more exciting is the nonchalant way economists have gone around praising this misguided plan.
Here’s a fun quote: “While a stimulus package will cost us, it’s going to cost us much less than doing nothing.” That was Mark Zandi, chief economist of economy.com. That’s right, he just made an argument that the expensive decision is better than nothing.
The stimulus package under debate right now is $150 billion, and Zandi predicted on CNN that even a mild recession would cost the United States $300 billion.
Not only is this package better than nothing, it’s cheaper, too. If Congress is serious enough about righting the economy to throw real money at us, then they should make fuel cheaper, or make food cheaper, or at least do something halfway meaningful.
Can you really talk about a recession without mentioning the Great Depression? No.
“You have to go back to the Great Depression for something comparable” to the risks of financial meltdown that we have stacked right now, according to Nouriel Roubini in an article on newsweek.com. Roubini is a professor of economics and international business at New York University.
Roubini is kind of right. Too many Americans have borrowed against their homes and racked up their credit bills. But don’t be too quick to blame poor people for wrecking the most powerful economy in the world, as some news outlets have. Financial institutions gave loans to people that could never have afforded to pay them back so they could sell those loans to foreign markets and use that money to invest. Now the whole world is tied in with us.
When Republicans and Democrats in Congress and the White House agree on an economic issue, there is cause for panic. The result could be a bungled economy, and in 10 short months, they might be out of a job.
Thomas King is a sophomore majoring in mass communication.