Talk:American Recovery and Reinvestment Act of 2009
The titles of articles should be designed to help users find information. Both parties call this the Economic Stimulus Bill. It calls for $500 billion in spendion (not one trillion), plus $300 bil in tax cuts. Note that if the bill fails we do not get the tax cuts. RJJensen 18:57, 10 February 2009 (EST)
Regardless of the fact that the bill may be referred to colloquially and in the (liberal?) media as the "Economic Stimulus Bill," the actual title of the legislation is the "American Recovery and Reinvestment Act of 2009." Perhaps redirects could be used to allow for both easy access and accuracy with regards to this article. --Economist 16:04, 12 February 2009 (EST)
- good point and I fixed it. RJJensen 22:26, 12 February 2009 (EST)
I think it is debatable that whether a tax-rebate gets spent right away or saved is the single determining factor of whether tax-rebates are a good stimulus. Since we are currently in a 'credit' crunch, it might actually be desirable that tax-rebates are saved, creating credit and shoring up banks. Even if they are saved, they may still be spent almost immediately on cars, houses, and new businesses, since banks that receive the money then have more money to loan out. It might also be debated that a tax-rebate, or any other government expenditure created with deficit spending, has greater negative consequences overall than doing nothing. In any event, when comparing a tax-rebate against infrastructure spending, it is recognized that tax-rebates tend to approach 100% spent in less than a year, rather than the multiple years it takes to disburse money set aside for a given infrastructure project. -- Jaycephus 16:11, 12 February 2009 (EST)
In general, the debate over whether tax cuts or direct government spending is a more effective stimulus is a debate over tradeoffs. Whereas tax cuts are more likely to be immediately spent, thereby offering faster relief, the fact that consumers may choose to save them instead diminishes their effectiveness. On the other hand, while government projects involve money that is guaranteed to be spent, as the federal government cannot "save" money it allocates for a given purpose, there is the issue (as you pointed out) of fiscal drag (i.e. that the projects will take time to be implemented). It's difficult to argue that doing nothing would be better, though.
As for saving being a good thing - it probably wouldn't be. Banks will have no incentive to increase lending unless corporations see a need to expand, which they will not do if the demand outlook continues to be sluggish. The only way to improve demand (and therefore to encourage expansion) is through increased spending. --Economist 16:42, 12 February 2009 (EST)
- I think that millions of families are badly overexteneded and that using the $800 to reduce credit card debit is very wise for them. There are multiple economic problems (such as credit crunch, unemployment, world trade and too-high debts), and this $800 will help only on the last one--but I think it that help is needed before people get into deeper trouble. RJJensen 22:26, 12 February 2009 (EST)
Heritage Foundation Quote
"But government spending plans do not stimulate the economy. They are based on the idea that feeding 'new' money into the economy will create economic growth. But the money isn’t new—it’s either taxed or borrowed. It's essentially redistributed from one group of people to another, and no new money is created."
As Jaycephus mentioned, a beneficial side effect of the stimulus may be that more money will be deposited into banks, thereby expanding their lending potential. While it is also true that lending will likely not increase by much if consumer demand does not also recover, this fact does highlight the potential for the "creation of money" that this quote denies can take place. Banks are the primary force behind growth in the money supply, and increased lending that could potentially be brought about by the stimulus would indeed have this effect. --Economist 23:11, 13 February 2009 (EST)
Cut from intro:
- In many ways the stimulus program resembled the Reconstruction Finance Corporation set up by Herbert Hoover and Congress in 1932 to deal with the Great Depression.
- OK RJJensen 17:45, 20 March 2009 (EDT)