Later On

A blog written for those whose interests more or less match mine.

Stimulus will fail?

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It has been pointed out that, as the nation strives to understand what’s necessary to right the economy, TV talk shows in general are avoiding having any expert voices—economists—to explain the situation to us. They much prefer to have the situation discussed by the anchor and a beat reporter, neither of whom understands an iota of economics. Paul Krugman has been on a talk show a couple of times, but you would expect, in a situation this dire and costing this much money, that the talk shows would be filled with economists. Not so. I haven’t blogged much on this because I don’t watch TV. (Some of the reasons are found in this very paragraph.)

Kevin Hall of McClatchy Newspapers has a good article on the stimulus:

The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won’t stimulate economic activity, according to a range of respected economists.

"I think (doing) nothing would have been better," said Ed Yardeni, an investment analyst who’s usually an optimist, in an interview with McClatchy. He argued that the plan fails to provide the right incentives to spur spending.

"It’s unfocused. That is my problem. It is a lot of money for a lot of nickel-and- dime programs. I would have rather had a lot of money for (promoting purchase of) housing and autos . . . . Most of this plan is really, I think, aimed at stabilizing the situation and helping people get through the recession, rather than getting us out of the recession. They are actually providing less short-term stimulus by cutting back, from what I understand, some of the tax credits."

House and Senate negotiators this week narrowed the differences between their competing stimulus plans. In so doing, they scrapped a large tax credit for buying automobiles that would’ve caused positive ripple effects across the manufacturing sector. They settled instead on letting purchasers of new vehicles deduct from their federal taxes the state and local sales taxes on the cars they bought.

The exception to this is for buyers of plug-in hybrids, cars that run off a battery that can be charged at home or in the office. Buyers of these vehicles, available in very limited supply, could get a tax credit of up to $9,100.

A Republican-backed proposal that would’ve provided a $15,000 tax credit to first-time homebuyers …

Continue reading. And see this graph from the article:


Written by Leisureguy

13 February 2009 at 10:17 am

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