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Economic Stimulus Package: Welfare or Tax Cuts

With talk about the so-called stimulus package everywhere, including the drive-by media and talk radio, it’s worth asking just what is being done, and will it be effective.

According to Chris Edwards of the Cato Institute, blogging at Cato@Liberty, $100 billion of the $150 billion stimulus package:

“is simply extra spending; it is a giant one-time welfare program. To pay for it, the government will borrow an added $100 billion, which will impose $100 billion of higher taxes on future generations.”

The title of an editorial in today’s NY Post pretty much says it all: “Free Money!” The editorial then goes on to point out:

“Unfortunately, the entire plan ultimately reflects one of the most enduring - and politically convenient - economic myths around: the notion that hard times can be softened by throwing money at them.

“That was the clear premise accepted by all sides of the debate in Washington this week: Get money into the hands of the people who would spend it as fast as possible, then stand back as their added purchasing power revs up America's economic engine.”

And will the package actually produce the expected economic benefits? According to the non-partisan Tax Foundation, the “economic benefits of fiscal stimulus (are) likely to be small.”

Current estimates are the checks won’t be in the mail until May or June at the earliest. Wouldn’t an easier and faster way of getting money back into the economy than the so-called ‘tax rebates’ in the stimulus package be to adjust employees’ tax withholding? Just further proof the politicians are doing ‘something’ for the people. Another political gimmick in our view -- paid for by you know who.

Hat tip to Chris Edwards, here’s the White House’s “fact sheet” on the stimulus package.

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