Obama and Congress sends out checks for April 2009 tax cut?

I remember on Election Night 2008 after Obama was declared the winner, there were many mainstream pundits on television saying that the first priority for Obama was to reduced the deficit first.
When the stimulus was first proposed there was a conscience decision to keep it under a trillion dollars which turned out to be enough to keep the economy going but not enough to expand fast enough to overcome the worst effects of the recession until a couple of years later when the economy picked up on its own.
While other countries went with an austerity recovery plan, the United States was the only country not to slip back in to a mild recession because the United States did stimulus.
The main reason that the recession was so deep and long was because of the requirements by many States and local governments to maintain a balanced budget and that meant deep cuts in spending and laying off of government workers that took money out of the economy, and it didn't help that many state and local governments decided to cut taxes even further and that caused even deeper cuts in government services at a time when they were needed more.
What if congress passed a bill saying it wasnt legal to have a balance budget requirment for state/local? Or does the propganda write itself?
 
I'm a pessimist, so I find it funny that some of you think people would spend it wisely either way. Give a check for $400, and people would use it to buy a new iphone, or TV, and ignore the credit card bill coming due.
Give them 10 bucks a week, they'll spend an extra 10 bucks a week, ignoring that credit card bill coming due.

The question is whether to have a one time spending bump, or a weekly spending bump.

That would actually be preferable in terms of economics. Paying down debt doesn't really give any economic boost to the wider economy. But buying something is demand. It means money moving. There is a reason Bush told people to go shopping after 9/11.
 
What if congress passed a bill saying it wasnt legal to have a balance budget requirment for state/local? Or does the propganda write itself?
The federal government can't ban those kinds of laws on the state and local level as the States are sovereign in their own right, and local governments are under the jurisdiction of state constitution, but what the federal gov could have done as to e a large chunk of money to state and local governments with the string attached that they could not reduce services, this would have cost about $75-$125 billion dollars a year and that would have reduced the impact of the recession.
 
I'm a pessimist, so I find it funny that some of you think people would spend it wisely either way. Give a check for $400, and people would use it to buy a new iphone, or TV, and ignore the credit card bill coming due.
Give them 10 bucks a week, they'll spend an extra 10 bucks a week, ignoring that credit card bill coming due.

The question is whether to have a one time spending bump, or a weekly spending bump.

The thing is I doubt people would even notice the $10 a week, and that is why it would remain in their account. Most people keep an eye on their account and want a certain cushion, varying by income. However, for most people, it is a guideline. If they want to have a couple of grand or so in their checking account $2010 is not going send them off to buy another cup of coffee or two.

They will allow it to accumulate and then either pay down their credit card (Actually a lot of people did that, which the stimulus had less impact than projected.)or buy an iPhone or whatever. That is why I think a big check at the end might well have more effect. $10 a week won't be noticed much but one big $520 check will even though it is the same amount of money.
 
That would actually be preferable in terms of economics. Paying down debt doesn't really give any economic boost to the wider economy. But buying something is demand. It means money moving. There is a reason Bush told people to go shopping after 9/11.

Most of the time I would agree but the banks had to increase their reserves anyway. This means any money used to pay off their credit cards could be used to shore up the banks' reserves freeing cash to be loaned out. In this case I think that paying off the debt would be better for the economy as it would have no impact short term but a good impact long term as people don't have to pay interest.

To illustrate what I mean. If the bank needs to increase its reserves by $20 billion and people pay back $10 billion then the bank needs to raise only $10 billion to have the reserves needed, most likely by not loaning out money from other loans repaid. Anything in excess of that could be loaned out. Maybe only $10 billion from payment from corporate bonds would be held in reserves instead of $20 billion. So it evens out in the end.
 
Most of the time I would agree but the banks had to increase their reserves anyway. This means any money used to pay off their credit cards could be used to shore up the banks' reserves freeing cash to be loaned out. In this case I think that paying off the debt would be better for the economy as it would have no impact short term but a good impact long term as people don't have to pay interest.

To illustrate what I mean. If the bank needs to increase its reserves by $20 billion and people pay back $10 billion then the bank needs to raise only $10 billion to have the reserves needed, most likely by not loaning out money from other loans repaid. Anything in excess of that could be loaned out. Maybe only $10 billion from payment from corporate bonds would be held in reserves instead of $20 billion. So it evens out in the end.

Bingo. The benefits are still there - they're just less immediate.

Reducing debt now also makes consumers more willing to spend in the future when the economic outlook improves.
 
Bingo. The benefits are still there - they're just less immediate.

Reducing debt now also makes consumers more willing to spend in the future when the economic outlook improves.

I'm saying more than that. The immediate effect would be the same. The banks would simply loan out money that was from repaid corporate bonds or something that was used to shore up reserves and use money that is being used to pay off credit card debt to shore up reserves. Money is fungible so it doesn't matter where it comes from.

My other point was $10 a week is so little no one notices it anyway so it isn't spent. After 20 or 30 weeks it might be noticed and be spent then. So I think, at best, you have it spent 20 or so weeks earlier.

It is also very possible with a $520 check it pushes you over the line where you feel comfortable dipping a bit into your savings and buying a $600 item.
 
. . When the stimulus was first proposed there was a conscience decision to keep it under a trillion dollars which turned out to be enough to keep the economy going but not enough to expand fast enough to overcome the worst effects of the recession until a couple of years later when the economy picked up on its own. . .
And before there was the Stimulus of Feb. ‘09, there was the Bailout of Oct. ‘08.

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https://news.gallup.com/poll/113047/americans-falling-favor-initial-bailout.aspx

This was the Bailout passed by Congress and signed by President Bush on Friday, Oct. 3, 2008. It provided up to $700 billion to bail out troubled financial institutions.

And then, when the bridge doesn’t collapse, so to speak . . . people of course wonder whether the whole thing was necessary.

My answer, it was!
 
And before there was the Stimulus of Feb. ‘09, there was the Bailout of Oct. ‘08.

ydxqm-xf9u-qto_8mu0v0g.gif


https://news.gallup.com/poll/113047/americans-falling-favor-initial-bailout.aspx

This was the Bailout passed by Congress and signed by President Bush on Friday, Oct. 3, 2008. It provided up to $700 billion to bail out troubled financial institutions.

And then, when the bridge doesn’t collapse, so to speak . . . people of course wonder whether the whole thing was necessary.

My answer, it was!


I still feel personally if everyone in 08 got a $2000 + check instead of the bank bailout and that the banks were broken up in a controlled way everything would of bounced back better.
 
. . . While other countries went with an austerity recovery plan, the United States was the only country not to slip back in to a mild recession because the United States did stimulus.
The main reason that the recession was so deep and long was because of the requirements by many States and local governments to maintain a balanced budget and that meant deep cuts in spending and laying off of government workers that took money out of the economy, . . .
For example, I think it was crazy for the state of New Jersey to lay off police and fire fighters around 2010.

And, I think it’s a real mystery why many European countries went the route of austerity (it may well be answerable, I just don’t know the answer).
 
For example, I think it was crazy for the state of New Jersey to lay off police and fire fighters around 2010.

And, I think it’s a real mystery why many European countries went the route of austerity (it may well be answerable, I just don’t know the answer).
Think Germany and it's fear of inflation (for some strange reason) that with it's lead role in the European Central Bank along with France is why there was no stimulus in the European Community.
 
I still feel personally if everyone in 08 got a $2000 + check instead of the bank bailout and that the banks were broken up in a controlled way everything would of bounced back better.
I urge you not to.

If we don’t bail out the banks, the results are likely to be so jarring that we’d think it was a good deal for each of us to only pay $2000+

Now, once we do the bailout, I’m all in favor of using Sherman Anti-Trust or similar as a hammer to break up the big boy banks.
 
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I urge you not to.

If we don’t bail out the banks, the results are likely to be so jarring that we’d think it was a good deal for of us to only pay $2000+

Now, once we do the bailout, I’m all in favor of using Sherman Anti-Trust or similar as a hammer to break up the big boy banks.

At the least, the ones bailed out should have been broken up. I would suggest they should have been broken up by state at that point. Any assets not directly held by a branch would be divided equally among branches.
 
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