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No expense spared

W

Wolfeymole

#1
The American Economy

TWO things that almost never happen looked set to happen on Thursday January 24th. Democrats and Republicans had reportedly reached a deal on how to stimulate the floundering American economy. And the bickering, slothful Congress seemed likely to pass some important legislation quickly.

Perhaps one should not be surprised. After all, everyone agrees that the economy is in trouble. A drastic interest-rate cut this week coincided with stockmarket upheaval. The housing market is in turmoil: new data show that the median home price fell last year by 1.8%. That may not sound like a lot, but so much of a typical American’s wealth is tied up in bricks and marble kitchen counters that a whiff of house-price deflation stokes unease. Politicians rarely need an excuse to shower grateful constituents with other people’s money. Now they have a powerful one.

President George Bush will unveil the whole package in his state-of-the-union speech on January 28th. But several details have leaked. Households will receive tax rebates of between $300 and $1,200, plus $300 for each child that they have. Pressure from Democrats ensured that even families too poor to pay taxes will benefit. And pressure from Republicans ensured that even couples who earn as much as $150,000 a year will get a handout.

The package also includes tax cuts for businesses, giving firms incentives to invest in new factories, showrooms, machine tools and so on. Small firms will enjoy laxer rules on writing off expenses, and ailing firms will get rebates for taxes already paid.

To buoy house prices the package includes a rescue plan for distressed mortgages more generous than anything previously mooted. Fannie Mae and Freddie Mac—two huge government-backed firms that finance and guarantee home loans—will be allowed to buy up mortgages significantly larger than the $417,000 maximum currently permitted. Critics worry that this will only delay a necessary correction in the housing market, but they will almost certainly be ignored.

Both parties have compromised. Democrats wanted to expand food stamps and unemployment benefits, but have backed down. Republicans wanted to target the rebates at those who pay income taxes, but have reportedly agreed to extend them to the large number of Americans who do not.

The package could pass within a week or two. Divided government means that both parties could be blamed for a severe recession, and neither wants that. One should never underestimate the capacity of individual senators to delay even the most popular bills, but the mood in Washington, DC, is so Santa Clausy that it would be a brave Grinch who tries to spoil the party. Whether the stimulus will prevent a recession or merely delay it is anyone’s guess.


Sourced from the Economist
 

help4me

FPCH Long Term Member
Joined
Dec 13, 2007
Messages
395
Location
USA
PC Experience
Some Experience
Operating System
Windows Vista - Home Basic
#2
My only fear... this is an election year. Each party is going to want to look it's spiffy best to the voter. Good ideas have a way of getting lost in loop holes, or taken away altogether after the votes have been counted.
 

AdvancedSetup

FPCH Long Term Member
Joined
Jan 9, 2008
Messages
819
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34° 12' 35" N, 118° 29' 21" W
#3
Well the 1.8% drop may not seem like much but it is almost 2 Trillion dollars which fans out and has affects in many other areas and markets.
Like a giant wheel that you can't get off of. Only time will tell how things work out, too much unknown and guessing going on.
 

Seth

FPCH Long Term Member
Joined
Dec 17, 2007
Messages
2,268
Location
Canada
Operating System
Windows Vista - Home Premium
#4
A few years ago in my country, one of the parties at election time vowed to get rid of a certain tax (GST). "It's gone" the leader of that party said, while one of his players vowed to resign if that tax wasn't eliminated.

What happened?

They were voted in based on such promises. They didn't remove that tax, and she didn't resign . Both now live a comfortable retirement on the "regular Joe's" back.

So what does this "democracy" do? NOTHING, as by law we have to tolerate such an employee for years.

Like I said, Democracy my ***.
 

Tony D

Free PC Help Long Term Member
Joined
Dec 30, 2007
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704
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Malvern, PA (USA)
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OSX
#5
In my life - taxes go up. They never decline - they may take different names, but they don't go away. They cut the tax in one area only to increase it in another. Bottom line - the government is fat and happy. Until they have to face the same tax consequence as the normally taxes regular tax payer, nothing will get better.

In the US, politicians have a totally separate health care and pension system as eveyone else. I believe that if they had the same issues as everyone else, they would fix the health care system because it would actually affect them. But that's not gonna happen.
 

JEBWrench

FPCH Member
Joined
Jan 8, 2008
Messages
309
Location
Aperture Science
PC Experience
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Windows XP - Media Center Edition
#6
Seth said:
A few years ago in my country, one of the parties at election time vowed to get rid of a certain tax (GST). "It's gone" the leader of that party said, while one of his players vowed to resign if that tax wasn't eliminated.

What happened?

They were voted in based on such promises. They didn't remove that tax, and she didn't resign . Both now live a comfortable retirement on the "regular Joe's" back.

So what does this "democracy" do? NOTHING, as by law we have to tolerate such an employee for years.

Like I said, Democracy my ***.
I can't believe I'm going to stick up for Sheila Copps, but...

Actually, she did resign, and ran for re-election. However, her prominent role in the Hamilton area, her being a major supporter of minority and women's rights, and the Reform party in the area being extremely stupid in her riding resulted in her being re-elected despite the GST promise.

For all the things the Liberals did wrong, the GST thing was pretty minor. And it was also because the Mulroney government cooked the books and the government wasn't actually in a position to financially eliminate the GST.

They actually did the responsible thing in keeping the GST.
 

Seth

FPCH Long Term Member
Joined
Dec 17, 2007
Messages
2,268
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Canada
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#7
"for all the things the Liberal government did wrong.."


Like all the "things" that any current government does wrong?

Let's see some reality. Let's see the average politician pick up some garbage on a Friday afternoon.
 

JEBWrench

FPCH Member
Joined
Jan 8, 2008
Messages
309
Location
Aperture Science
PC Experience
Operating System
Windows XP - Media Center Edition
#8
If anyone saw that, they'd know it was vote-mongering. :D

(Besides, doesn't Jack Leyton do that sort of thing?)