Clinton to Unveil $70 Billion Economic Boost

[Jolie Rouge]

Clinton to Unveil $70 Billion Economic Boost
By Janet Hook - The Los Angeles Times

Fearing a recession, she'll seek funds to stem fore- closures, help pay heating bills, expand unemployment insurance and - in case of a prolonged slump - offer tax rebates. Washington - Amid growing signs of trouble in the U.S. economy, Democratic presidential candidate Hillary Rodham Clinton will propose a $70-billion package today to stimulate the economy and will urge Congress to stand ready to offer a $40-billion rebate to taxpayers if the slump continues. The New York senator's economic package, to be announced in a speech in Los Angeles, includes temporary measures to quickly inject money into the economy and help middle-class families, including housing aid, to stem foreclosures; energy assistance; and liberalized unemployment insurance.

The initiative, larger than an economic stimulus proposed last month by former Sen. John Edwards of North Carolina, one of her rivals for the nomination, comes as Clinton is trying to build on her victory in the New Hampshire primary. The package dovetails with her efforts to appeal to middle- and lower-income workers, an important part of the coalition that has backed her in early voting. "I believe we have a lot of families who are really hurt- ing," Clinton said Thursday in a telephone interview. "I think we're sliding toward a recession." Bipartisan concern about a possible recession, the housing slump and rising energy prices has been growing. Federal Reserve Chairman Ben Bernanke said Thursday that the central bank may be ready to make "substantive" interest rate cuts to avoid recession. And the White House also is considering an economic stimulus plan. The economy - an issue that had been eclipsed on the campaign trail by the Iraq war - is a matter of increasing attention for the candidates. Stumping in economically battered Michigan, which holds its primary Tuesday, Republican contenders have been talking more about the issue but not called for a stimulus. Among Democrats, Edwards has proposed a $25-billion jobs plan and urged Congress to be ready to pass $75 billion more upon evidence of a recession.

Like Edwards' plan, Clinton's approach differs from the last time Congress - then controlled by Republicans - enacted an economic stimulus plan. That 2003 law provided aid to states and tax breaks for businesses and individuals. Clinton's plan packages new proposals with ideas she has championed in the past. A memo describing the plan says it meets her three principles for economic stimulus: fast-starting, temporary and progressive. The plan is designed to be immediate and to last only through 2008. Key elements include a $30-billion fund to help states and cities stem foreclosures in the subprime mortgage crisis, and a 90-day moratorium on subprime foreclosures. She will also propose $25 billion in emergency home-heating assistance and $10 billion to expand unemployment insurance. If economic conditions worsen, Clinton plans to say, Congress should provide $40 billion in direct tax rebates to middle-class families.

Clinton began talking about the possible need to stimulate the economy last month in a speech on Wall Street. But Gene Sperling, one of her senior economic advisors, said Clinton moved cautiously before drawing up a plan because of concerns about adding to the federal deficit with a cash infusion to the economy. Most of her campaign promises have included plans to offset new spending, but her stimulus plan does not. Sperling said Clinton's decision to offer a plan now came after recent reports of continuing contraction in the manufacturing sector and last week's Labor Department report that the unemployment rate had jumped to a two-year high of 5%. Some economists are skeptical that anything other than Fed interest-rate cuts can effectively avert a recession. They say Congress often does not manage to pass stimulus measures until it is too late.

Where does this money come again ??

[Advertisement]

[Jolie Rouge]

Pennies From Heaven
Tax rebates are not the answer.
By Rich Lowry

The housing market is caught in a downward spiral that might last the rest of this year, and banks are struggling under a staggering burden of bad loans that has created a severe credit crunch. Don’t fear, though, a $250 check might be making its way toward your mailbox.

That’s the economic “stimulus” that Democrats are coalescing around to forestall a recession. Barack Obama wants a $250 tax rebate and a payment of $250 to Social Security beneficiaries. If that doesn’t work, he has a Plan B: sending out another $250 check. Hillary Clinton wants to try $70 billion in new government spending first, then, if the new tide of red ink fails, blanket the country with $40 billion worth of rebate checks.

With the White House considering its own rebate proposal, some such scheme is likely to emerge as the lowest common denominator of sophomoric economic policy for both parties.

A $250 check is the equivalent of winning a tiny jackpot on a convenience-store lottery ticket. It’s not going to spur any lifestyle changes or fund any major purchases. This is why the history of the tax rebates — including the last time it was tried in 2001 — is a sorry one.

Most people aren’t stupid enough to think a $250 check improves their economic standing. This is keeping with the late economist Milton Friedman’s “permanent income hypothesis,” which said that people don’t change their spending habits based on small blips in their income. In short: You can’t fool people into thinking that they are richer than they really are.

So it is that research shows that most of the 2001 tax rebates were used to pay down debt or were saved. According to a study by University of Michigan economists, only about 20 percent was spent. This was a tiny stimulus at best, and if it was spent on common consumer goods — clothing and the like — probably went to imports from overseas.

Despite its economic nullity, rebate checks are politically seductive to Democrats because they can be focused on low-income taxpayers, and to politicians of all stripes because they show government is “doing something.” Never mind that they often are irrelevant to the problem at hand — it was a slowdown in business investment that drove the 2001 downturn, and a credit crunch stemming from the housing crisis that risks creating one now.

It is the curse of capitalism that it suffers boom-and-bust cycles. In recent economic history, we’ve had the savings-and-loan bubble, the tech bubble and now the housing bubble. The lesson of all of them is that if it’s too good to be true, it is. The blessing of capitalism is that — often brutally — it adjusts and re-establishes its equilibrium. If too many houses have been built, the only way to stop it is if their price goes down — exactly what’s happening now.

For the most part, government can’t game the economy through clever temporary fixes. The key dishonesty in any stimulus debate is found in the phrase “jump-start,” suggesting it’s within the power of government to quickly and precisely influence the course of a $13 trillion economy. The Clinton campaign promises not just to “jump-start” the economy, but to “jump-start green-collar jobs.” This is supposed to happen through a “crash weatherization program,” tax credits for hybrid vehicles, and a “Green Building Fund” and “green-collar job training programs.” Talk about a fairy tale.

Clinton is embracing the kind of massive stimulative public spending that her husband proposed in his 1992 campaign, before abandoning it as fiscally imprudent upon taking office. It turned out that the recession of the early 1990s was over even while Clinton was campaigning against it. That’s the way it usually works — the market moves faster than politicians.

By the time you get your rebate check, the chances are a recession will already be upon us, or the threat will already have passed. Enjoy the extra couple hundred bucks.

[Jolie Rouge]

Romney proposes $250 bln economic stimulus package
2 hours, 38 minutes ago

LAS VEGAS (Reuters) - Weighing in on a debate about stimulating the slowing U.S. economy, Republican presidential contender Mitt Romney is calling for a package of tax breaks expected to cost $250 billion, an aide said on Friday.

The former Massachusetts governor's package centered on several permanent tax cuts, rather than temporary rebates and spending programs favored by others engaged in the stimulus discussion in Washington and on the campaign trail.

The package was first reported by the CNBC television network and confirmed by Romney spokesman Eric Fehrnstrom.

Romney, who has been campaigning in Nevada ahead of its nominating contest on Saturday, plans to propose permanently reducing the rate for the lowest income tax bracket to 7.5 percent from 10 percent, retroactive to 2007. He also wants to eliminate Social Security payroll taxes for workers over 65 and eliminate capital gains and dividend taxes on households earning less than $200,000 a year.

He also would permanently reduce the corporate tax rate to 20 percent from 35 percent over two years and allow businesses to depreciate the value of new equipment purchases faster.

President George W. Bush earlier on Friday called on Congress to enact a package of temporary tax cuts and other measures estimated to cost up to $150 billion.

On the potential impact on the long-term budget deficit of his package, Romney told CNBC, "If we go into recession, the cost to our balanced budget is going to be far more severe than the cost of this program."

"The kinds of stimulative actions we take should be pro-growth. They aren't just writing checks for people to buy oil or TVs," he said, according to CNBC.

http://news.yahoo.com/s/nm/20080119/...Bn5HEmaK2s0NUE

[Shann]

Where does this money come again ??

probably from the same place all that money Bush keeps approving to spend on the war...

[Jolie Rouge]

Too many people have been borrowing money and spending beyond their means–charging their credit cards up the wazoo, buying more house than they can afford, etc., etc., etc. So what’s Washington’s solution? Give ‘em “tax rebates” so we can spend, spend, spend our way out of recession. President Bush takes to the podium this hour to unveil the outlines of his economic stimulus plan.

Bush Calls for $145 Billion Economy Plan
Jan 18 11:43 AM US/Eastern
By ANDREW TAYLOR and DEB RIECHMANN

WASHINGTON (AP) - President Bush on Friday called for about $145 billion worth of tax relief to stimulate a sagging economy and fend off a possible recession.

Bush said that to be effective, an economic stimulus package would need to roughly represent 1 percent of the gross domestic product—the value of all U.S. goods and services and the best measure of the country's economic standing. White House advisers say that, in current terms, 1 percent would amount to around $145 billion, which is along the lines of what private economists say should be sufficient to help give the economy a short-term boost. "Letting Americans keep more of their money should increase consumer spending," he said.

Bush said that Congress should work as soon as possible to send him legislation to "keep our economy growing and creating jobs."

The president and Congress are scrambling to take action as fears mount that a severe housing slump and painful credit crisis could cause people to close their wallets and businesses to put a lid on hiring, throwing the nation into its first recession since 2001.

http://www.breitbart.com/article.php...cle=1&catnum=0


Bush wants fast tax aid to boost economy
By DEB RIECHMANN, Associated Press Writer
Fri Jan 18, 6:37 PM ET

WASHINGTON - With recession fears rising and the stock market tumbling, President Bush on Friday called for up to $150 billion in tax relief for consumers and business — and said there was no time to waste.

Bush's urgent remarks gave fresh impetus to congressional leaders already hard at work on an economic rescue package that would include extra money for food stamps and jobless benefits in addition to tax rebates of hundreds of dollars each for millions of Americans. The hope is that people would immediately spend those rebates and give the economy a badly needed boost. "I believe we can come together on a growth package very quickly, and we're going to need to," Bush said.

Wall Street remained skeptical. The Dow Jones industrial average dropped 59.91 points after plummeting 306 points a day earlier.

Bush said the rescue effort should be both quick and temporary, a one-time boost for a national economy that is in danger of sliding into the first recession since 2001 if it hasn't already edged across that line. The president's tone was somber in his remarks at the White House, but his mood was upbeat later in the day when he visited a factory to underscore his focus on the economy.

"Crank this sucker up," he exclaimed, an exhortation that could fit his hopes for economic revival, though he was referring specifically to a huge riding mower at Wright Manufacturing. Once the engine was roaring, Bush jumped on and steered the mower playfully.

Despite darkening economic reports, he said that if Congress passes a quick federal relief package, "We're gonna be just fine."

At the White House earlier, Bush avoided the word "recession" but acknowledged the economy was severely strained by the long housing slump and high oil prices. "There is a risk of a downturn," Bush said.

For a stimulus package to have much impact, he said it would need to represent roughly 1 percent of the gross domestic product, or about $140 billion to $150 billion.

On Capitol Hill, Democratic leaders pledged to cooperate with Bush and congressional Republicans. Senate Majority Leader Harry Reid, D-Nev., had criticized Bush on Thursday for deciding to speak publicly on the package before a deal had been struck, but Reid said Friday he was encouraged by the president's remarks.

Some Democrats, though, said they were disappointed that Bush had focused only on taxes. "We want a balanced package of tax rebates for the middle class and spending stimuli that jump-start the economy quickly. The president has included one; he also needs the other to quickly improve our economy," said Charles Schumer, D-N.Y.

Sen. Edward M. Kennedy, D-Mass., said that "we cannot forget that any effective stimulus plan must start and end with America's working families. The people who are struggling every day to pay their bills, heat their homes, and pay their mortgages need our help now, and helping them is the best way to be certain that any stimulus goes directly into the economy."

Signaling a willingness to cooperate, Rep. Barney Frank, D-Mass., was to say in the Democrats' Saturday radio address: "Democrats stand ready to work with the president and congressional Republicans to put together a bipartisan package including tax rebates for most Americans,and one-time increases in programs directed at those who are bearing the heaviest burdens in this economy."

Treasury Secretary Henry Paulson said the administration was being intentionally vague so as not to taint negotiations with lawmakers, but he spoke with vigor about fast action. "When we get the legislation, we're going to run like a bunny here to get the relief out," he said.

Paulson said business incentives the administration envisions would help companies invest, expand and hire more workers. The White House estimates that a stimulus in the range of what Bush wants could create 500,000 additional jobs this year. "We need to get this deal done and get it out and get money in the hands of our consumers and small business owners."

Democratic congressional leaders agree that tax relief should be in the package. Lawmakers are considering tax breaks for businesses investing in new equipment and a $500 rebate for individuals, said congressional aides involved in the talks. Details for couples and people with children are still being negotiated.

Senior aides to House Democrats and Republicans, however, said the measure also could contain increases for food stamps, and higher unemployment benefits. "Democrats welcome President Bush's willingness to work together with Congress to provide urgent relief to the millions of Americans facing economic hardships," House Speaker Nancy Pelosi, D-Calif., said, adding that the two parties would "work together on the details of a stimulus package."

Bush has gone down the tax rebate road before. Back in 2001, he added refunds of up to $300 per individual and $600 per household as a recession-fighting element of the tax cut plan that had been the centerpiece of his 2000 campaign.

http://news.yahoo.com/s/ap/20080118/...QZl7DnUPAE1vAI


I’m all for the government giving me back my money. But why not drop the economic stimulus pretense? Just give me back my money. If the government can spare these “rebates” and send them back now, why did they take the money in the first place? Forget this temporary candy. Why not make this “rebate” permanent?

Another point: Given the estimates so far, these “rebates” will be more than offset by proposed and scheduled tax hikes and spending increases in liberal-nomics-dominated states like Maryland, NY, and NJ.

Another point: When exactly would these “rebates” get into the hands of taxpayers? By the time the checks get cut and mailed, the recession could be over. Government has a way of lagging like that.

Another point: As I’ve said repeatedly now, stimulation-palooza will inevitably be larded up with special-interest pork and other spending goodies in the tens of billions of dollars.

And let’s be clear what Washington wants people to do with this money. They want people to spend it. Not to save it. Not to apply it to their debt. Spend, spend, spend: http://www.bloomberg.com/apps/news?p...JFHqA&refer=us

Congressional leaders say any economic-stimulus plan may be as much as $150 billion.

“It’s getting money to people who are likely to spend it,” Leonard Burman, director of the Washington-based Tax Policy Center, said of the Bush plan. “It might do a little good for the economy.”

Bush has decided the U.S. needs a short-term economic assist from the government to avert a recession, White House officials said yesterday.

“The president does believe that over the short term, to deal with this softening of the economy, that some boost is necessary,” Deputy Press Secretary Tony Fratto told reporters at a briefing.

Ed Gillespie, senior counselor to the president, said today that Bush will call for a “timely” package of measures.

“The president is going to call for a growth package that is timely, that is direct, that is simple, that does allow for taxpayers to have more money to spend,” Gillespie told Bloomberg Television.

In other words: The stimulus will stimulate more of the same bad behavior that got people into trouble in the first place.

Brilliant.

[Jolie Rouge]

Thursday January 17, 2008
Stimulants are harmful to the economy[i]
Let's not reward people who don't pay all their bills[i]

The headline in the Los Angeles Times last week was one filled with the hope of bad things to come: "Public senses an economy going south."

Some of us in the newspaper game root for bad news, and the Times reporters went all the way to Colorado to find poor Shane Covelli, who is about to lose his car.

A Corvette.

And he's pulled his son from the ski team.

And he no longer takes his wife out to dinner.

Still, his bills exceed his $51,000-a-year income by $1,800 a month.

He's 44.

Usually, people learn by 44 that if they earn $51,000 a year, they should not spend $70,000 a year.

Then there is poor Bernadette Smith of Atlanta who, the Times said, "has watched her credit-card debt climb to nearly $40,000."

Just like that. It magically climbed.

Well, the Times conceded, she may have had something to do with that climb. "Once obsessed with the latest style of designer jeans, Smith now shops for clothes only at Wal-Mart, or maybe Target. She has come to consider a dinner at Ruby Tuesday a splurge," the Times wrote.

I don't have $40,000 in credit card debt. I shop at Wal-Mart. Ruby Tuesday? Occasionally my wife and I go to Bob Evans, but usually it is Diehl's.

And then there's Leslie Garza, 18. The Times said the economy is causing her to lose an hour's sleep each night because she has to - gasp - take a bus to work.

Of course she could go to bed an hour earlier. And instead of having a cell phone, she could have saved up for a car. But she's 18 and I don't expect her to act logically.

I do expect the people at the Los Angeles Times to get a grip on basic economics.

Living beyond one's means, which is what these three people are doing, is a good way to stay poor. There is a fine passage in Tom Wolfe's "Bonfire of the Vanities" in which he described how a stockbroker must make at least $3 million a year just to get by.

It is a hoot.

Now then, the Corvette guy, the designer jeans gal and the cell phone kid all share one thing in common: They are fools for living beyond their means.

And wherever there is a fool, there is a politician seeking the fools' vote.

It being a presidential election year, candidates are all preparing economic stimulus packages, which is like giving meth to addicts. Instead of "doing something," politicians should do nothing. They have already messed things up.

In the 1960s, people complained about the redlining of inner-city neighborhoods. Banks would not lend money to people to buy homes in the slums.

Politicians changed that.

Today, banks loan money to people who can't repay loans. These are called subprime mortgages. Lo and behold, the live-beyond-their-means crowd defaulted on these loans.

Now the politicians are blaming the banks and want to save the "homes" of those who don't pay their bills.

Ta-da.

Here's how the Surbers save their house. Every month, I get out this thing called a checkbook. I peel off a check and write out an amount and sign it. Then I put the check in an envelope and mail it to the bank.

I could do this electronically, but I'm old-fashioned. I pay the mortgage first. By mail.

Congress should encourage such behavior. It motivates people to show up for work. They show up and taxes get paid.

Of course, first Congress has to live within its means - or better put, within the means of taxpayers.

Instead, Congress and President Bush are moving to encourage bad behavior. They will reward the Corvette owners and designer jeans ladies to spend, spend, spend without ever having to pay back.

Getting into a bidding war over how big an economic stimulus package to foist upon the taxpayers is not a confidence builder among the great majority of us who don't own Corvettes, don't wear designer jeans and don't miss mortgage payments.

I hope we vote accordingly.

http://dailymail.com/Opinion/DonSurber/200801170722

[Jolie Rouge]

Sticky stimulus
Tue Jan 22, 12:20 AM ET

There's a saying in Washington when lobbyists try to attach provisions to fast-moving, must-pass legislation such as the economic stimulus bill that President Bush and Congress are readying for liftoff: It's like throwing bubble gum at a rocket — if it sticks, it's gone.

The flinging has begun. For special interests, the stimulus bill is an irresistible opportunity to grab some taxpayer money. It's an election year. The economy is in trouble, and voters are pressing Washington to act. The president and congressional leaders have agreed to do something. The question is what.

Lobbyists have no shortage of ideas: Slash the corporate tax rate. Create a standard tax break for the use of a home office. Shower billions on water projects and other infrastructure construction. Send billions more to states to help them shore up their Medicaid funds and stop the layoffs of state workers. Enact tax breaks for clean energy projects. Launch a new, multimillion dollar ad campaign to attract foreign tourists and shore up jobs at resorts, hotels and restaurants.

And so on.

Not all of these are necessarily bad ideas, but they should be considered on their own merits and not be tossed willy-nilly onto the stimulus package. Bush set the right tone when he said he wouldn't use the stimulus bill to try to make his earlier tax cuts permanent, a key goal for him and conservative Republicans but a deal breaker for Democrats. Democrats would do well to proceed in the same spirit.

Encouragingly, both sides seem to have subscribed to the mantra that any stimulus bill be "timely, temporary and targeted." That argues for quick, simple, one-time tax rebates for individuals and short-term investment incentives for business.

Negotiators dickering over who should get the tax relief should remember what happened the last time the government handed out rebates, in the 2001 recession. Studies showed that those with lower income and higher debt were more likely to spend their rebates than save them. Because the goal is to boost the economy by injecting cash, negotiators would do well to tilt the relief that way. That includes making it available to workers who earn too little to pay income taxes.

A recession might be inevitable no matter what the government does. The $140 billion stimulus package being discussed represents just 1% of a $14 trillion national economy. The best it can do is help moderate the misery. But if it turns into another Washington exercise in gum-throwing, it'll do more harm than good.

http://news.yahoo.com/s/usatoday/200...Npn5gAVEn8B2YD

[Jolie Rouge]

Bush hails tax-rebate deal as ‘robust’
Rebates for families, business tax cuts to boost the economy
Lawmakers announce tax rebate deal

WASHINGTON - Congressional leaders announced a deal with the White House Thursday on an economic stimulus package that would give most tax filers refunds of $600 to $1,200, and more if they have children.

House Speaker Nancy Pelosi said Congress would act on the agreement — hammered out in a week of intense negotiations with Republican Leader John A. Boehner and Treasury Secretary Henry Paulson — “at the earliest date, so that those rebate checks can be in the mail.”

President Bush is hailing the deal with congressional leaders on tax rebates and business tax cuts as "an effective, robust and temporary set of incentives" that will boost the U.S. economy.

The rebates, which would go to about 116 million families, had appeal for both Democrats and Republicans. Pelosi’s staff noted that they would include $28 billion in checks to 35 million working families who wouldn’t have been helped by Bush’s original proposal. Republicans, for their part, were pleased that the bulk of the rebates — more than 70 percent, according to an analysis by Congress’ Joint Tax Committee — would go to individuals who pay taxes.

Individuals who pay income taxes would get up to $600, working couples $1,200 and those with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don’t pay taxes would get $300 rebates.

The first rebate payments could begin going out in May, and most people could have them by July, Paulson said, noting that the IRS will already be overwhelmed processing 2007 tax returns. The rebates were expected to cost about $100 billion, and the package also includes close to $50 billion in business tax cuts.

The package would allow businesses to immediately write off 50 percent of purchases of plants and other capital equipment and permit small businesses to write off additional purchases of equipment. A Republican-written provision to allow businesses suffering losses now to reclaim taxes previously paid was dropped.

Pelosi, D-Calif., agreed to drop increases in food stamp and unemployment benefits during a Wednesday meeting in exchange for gaining the rebates of at least $300 for almost everyone earning a paycheck, including those who make too little to pay income taxes. “I can’t say that I’m totally pleased with the package, but I do know that it will help stimulate the economy. But if it does not, then there will be more to come,” Pelosi said.

Boehner said the agreement “was not easy for the two of us and our respective caucuses.”

“You know, many Americans believe that Washington is broken,” Boehner said. “But I think this agreement and I hope that this agreement will show the American people that we can fix it and will serve to move along other bipartisan agreements that we can have in the future.”

Paulson said he would work with the House and Senate to enact the package as soon as possible, because “speed is of the essence.”

The Treasury Department has already been talking to the IRS about getting the checks out “as quickly as possible, recognizing that the tax filing season is ongoing,” said Treasury spokesman Andrew DeSouza.

The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps are higher for those with children.

The agreement left some lawmakers in both parties with a bitter taste, complaining that their leaders had sacrificed too much in the interest of striking a deal. Many senior Democrats were particularly upset that the package omitted the unemployment extension. “I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own,” Rep. Charles B. Rangel, D-N.Y., the Ways and Means Committee chairman, said in a statement.

Sen. Max Baucus, D-Mont., the Finance Committee Chairman, said leaving out the unemployment extension was “a mistake,” as he announced plans to craft a separate stimulus package in the Senate starting next week.

Majority Leader Harry Reid said the goal is to send the package to the White House by Feb. 15 for President Bush’s signature, but he noted the Senate would likely try to add more spending to the package. “I expect that the (Finance) Committee and other senators will work to improve the House package by adding funds for other initiatives that can boost the economy immediately, such as unemployment benefits, nutrition assistance, state relief and infrastructure investment,” Reid said in a statement.

Bush has supported larger rebates of $800-$1,600, but his plan would have left out 30 million working households who earn paychecks but don’t make enough to pay income tax, according to calculations by the Urban Institute-Brookings Institution Tax Policy Center. An additional 19 million households would receive only partial rebates under Bush’s initial proposal.

To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac’s loan purchases.

After a key Wednesday night meeting in which the parameters of an agreement were reached, Pelosi and Boehner spoke again Thursday to cement the accord.

In the talks, Pelosi pressed to make sure tax relief would find its way into the hands of lower-income earners while Boehner pushed to include upper middle-class couples, according to congressional aides.

The package was drawing fire from liberal activists and labor unions upset that proposals to extend unemployment insurance and boost food stamps had been dropped. Many Democratic lawmakers had assumed those proposals would make it into the package, and critics of the deal said those ideas could pump money into the economy more quickly than tax rebate checks that won’t be delivered until June.

Democrats wanted to extend unemployment benefits for people whose 26 weeks of benefits have run out, but Republicans resisted.

Conservative Republicans, meanwhile, were likely to be restless over tax rebates going to those without income tax liability.

Democratic aides said greater GOP flexibility over giving relief to poor families with children — who would not have been eligible under Bush’s original tax rebate proposal — was the catalyst that moved the talks forward.

http://www.msnbc.msn.com/id/22782454?GT1=10755

Republicans, for their part, were pleased that the bulk of the rebates — more than 70 percent, according to an analysis by Congress’ Joint Tax Committee — would go to individuals who pay taxes.

In other words, 30% will go to people who do NOT pay taxes ... how do you qualify for a TAX REBATE if you do not PAY taxes ???

Many senior Democrats were particularly upset that the package omitted the unemployment extension. “I do not understand, and cannot accept, the resistance of President Bush and Republican leaders to including an extension of unemployment benefits for those who are without work through no fault of their own,” Rep. Charles B. Rangel, D-N.Y

And who - exactly - determines who is "without work through no fault of their own" and who are just too lazy to go out and get a job ?

[Jolie Rouge]

Chuck Schumer wants a second stimulus package
January 24, 2008 01:18 PM

Camel’s nose under the tent, as I’ve said before. I’m watching Chuckie Schumer on the Senate floor right now heralding Pelosi and Boehner for hammering out the tax rebate agreements for a $150 billion economic stimulus package. That proposal will be announced today at 1:30pm Eastern.

But, of course, it’s not enough.

In addition to $180 million for “Housing Counseling Assistance” that he helped stick into the omnibus spending bill, Schumer wants more money for counseling borrowers who should have known better before buying more house than they could afford.

And he wants a second stimulus package to deal with “infrastructure.” Whatever the hell that means.

They’ve only just begun.


***

Hans Bader at OpenMarket.org points out that Welfare + Discrimination = “Stimulus Package:” http://www.openmarket.org/2008/01/24...mulus-package/

They’re giving out rebates, but if you are a middle-class taxpaying family in a high-living cost region, you’re out of luck. The rebates only go to single people making less than $75,000 per year or married couples making less than $150,000.

For the crime of being married to me, my wife, who made less than $75,000 last year (she recently quit her job to take care of our new baby daughter), will be denied her refund, because our combined household income is just a hair over $150,000. If we lived together “in sin,” she’d get a rebate, but because we’re married, she won’t.

If she weren’t married to me, she’d receive a rebate for our daughter, too! Too bad our daughter wasn’t born out of wedlock. Then we’d qualify.

By contrast, non-taxpayers — people who currently pay no federal income taxes and actually get an earned income tax credit back — will be eligible.

Don’t you love farce?


***

More to come, via the NYT:
http://www.nytimes.com/2008/01/24/wa...in&oref=slogin

Senator Max Baucus, the Montana Democrat who is chairman of the Finance Committee, reiterated his interest in extending unemployment benefits at a hearing on Thursday morning, where he said his committee would mark up a fiscal stimulus bill next week.

“There are reports that a deal may be close on the House side,” Mr. Baucus said. “The Senate will want to speak, as well.”

That announcement of potential action by the Finance Committee could jar Democratic leaders who have been striving for a carefully coordinated effort on the economy. Earlier this week, Mr. Reid announced that the House would take the lead in developing the stimulus package and would conduct the immediate negotiations with the White House and Congressional Republicans.

Noting that tax rebates were one potentially cost-effective method to spur new spending, Mr. Baucus said: “Another example would be expanding unemployment insurance benefits. In recent recessions, Congress has extended the number of weeks that unemployed workers could receive benefits. We could do that again. We could provide a further extension for recipients in high unemployment states. And we could also temporarily increase the dollar amount of benefits to help unemployed workers to pay their bills.”

[Jolie Rouge]

Opinion : Our view on fighting recession :
Stimulus plan may ease pain, but it's no economic cure-all
Fri Jan 25, 12:22 AM ET

It's amazing how quickly President Bush and House Democrats can put aside partisan differences when they have important constituencies to coddle. Their stimulus package, unveiled Thursday, would put cash in the hands of the non-wealthy, slash taxes on businesses and take steps to ease the housing slump.

These provisions are a big deal for Democrats, Republicans and the real estate lobby, respectively.

Yet as easy as it is to be cynical about politicians bearing gifts in an election year, a moderately sized and mostly temporary package like this can be valuable when the economy is slowing. Given the possibility of a severe downturn, erring on the side of action is a prudent move to moderate the human misery.

Combined with interest-rate cuts by the Federal Reserve (a more effective way of boosting the economy), this fiscal package could flush money into the system and help forestall a vicious cycle of people cutting back on spending because of recession fears, which would cause the economy to slow even further.

By far, the plan's most appealing feature is a series of tax rebates to individuals earning less than $87,000 ($174,000 per couple) a year. These rebates, which could run as high as $1,200 per couple plus $300 more per child, would help soften the blow for struggling families. Given the precarious state of the economy and the whole point of a stimulus package, this could be one of those rare moments when lawmakers could be forgiven for not coming up with offsets to atone for increasing the budget deficit.

The main downside of the rebates is logistical. The government won't be able to process them until after April 15, meaning the checks won't arrive in people's mail boxes until late spring or summer. As the deal goes to the Senate, whose leaders were not in on it, ways to get at least some money out faster, such as an increase in food stamps or an extension of unemployment benefits, should be considered.

Even more important, as the legislative process proceeds, is to ensure that the package stays free of fine-print provisions that drive up its cost and benefit special interests.

By far, the most dubious provision already in the plan is one allowing Fannie Mae and Freddie Mac to buy mortgages of up to $730,000, up from the current limit of $417,000.

Raising this limit for the two publicly traded companies would do little to address the subprime mortgage mess. And it would not constitute much of an immediate stimulus, as its effects would take years to play out. It is little more than a sweetheart deal, and a coup for the real estate lobby.

Aside from the gift to Fannie and Freddie, this is the kind of temporary, targeted package that makes sense. That it could be hammered out with such remarkable speed, by a bipartisan group of lawmakers and presidential aides, is both encouraging and a testament to the power of fear.

Now it would be nice if these leaders could show the same urgency and willingness to work together in fixing the nation's long-term problems, budgetary and otherwise, that they are showing in handing out election-year goodies.

http://news.yahoo.com/s/usatoday/200...CaAK15vQqs0NUE



Opposing view : An economic mistake
Fri Jan 25, 12:21 AM ET
By William Niskanen

President Bush and House Speaker Nancy Pelosi have, sadly, come to agreement on a completely backward economic stimulus package. Among other things, the plan includes a tax rebate or credit of up to $1,200 for each family with an annual income under $150,000, and a temporary cut in taxes on business investment.

Most of this makes no economic sense.

The rationale for extending tax rebates and credits to middle class families is to increase their demand for goods and services, but it would all be financed by an equivalent increase in the federal deficit. Worse, as Alan Auerbach of the University of California at Berkeley concludes, it would have no significant effect.

As has been characteristic of almost all prior examples of temporary fiscal stimulus, any effects on the behavior of the recipients will be delayed until after the economy has already started to recover. The IRS recently announced that the volume of 2007 tax returns would prevent it from mailing checks out any earlier than June, by which time the economy will probably be righting itself.

The temporary reduction of taxes on business investment would probably increase such investment by a small amount, but mostly by pulling forward investments that would otherwise be made later.

Fiscal policy should not be used in the futile attempt to stabilize the economy. The Federal Reserve's monetary policy is far more effective at this task, and the large recent reduction in the fed funds rate illustrates that it can respond more quickly and more forcefully than any change in fiscal policy.

In general, government policy should be judged by its effects on the incentives to work, save, invest, and increase productivity and output. This fiscal stimulus package would do almost none of the above.

Politicians, in election years especially, feel compelled to be seen as doing something in response to the general concerns of their favored constituencies. Mr. Bush's and Ms. Pelosi's fleeting moment of bipartisan agreement might look good on TV, but it's still an economic mistake.

William Niskanen is chairman of the Cato Institute, a libertarian think tank in Washington, D.C. He served as chairman of the Council of Economic Advisers in the Reagan administration.

http://news.yahoo.com/s/usatoday/200...7bcs.C0U78B2YD

[momto7]

Most average people have not heard that Ron Paul has released his "Comprehensive Economic Revitalization Plan"
Which is listed on his website
http://www.ronpaul2008.com/prosperity

Don Luskin and Peter Schiff both are now Ron Paul economic advisors.

"“Ron Paul’s economic plan is the real thing – a plan. It’s not just a band-aid designed to ‘stimulate’ the economy in an election year. It’s a fundamental agenda for real and lasting change, making the US economy more vibrant and competitive, and removing barriers to advancement for all Americans.”
Donald L. Luskin is Chief Investment Officer for Trend Macrolytics LLC and contributing editor to the National Review Online and SmartMoney.com. He is also a frequent guest on CNBC, and the author of two books: Index Options and Futures: The Complete Guide and Portfolio Insurance: A Guide to Dynamic Hedging."

Also
"“We need a plan that stimulates savings and production not more of the reckless borrowing and consumption that got us into this mess in the first place. Ron Paul’s plan is the only one that amounts to a step in the right direction. If you want meaningful change - for the better that is - Ron Paul is the only candidate capable of delivering it. The others merely promise to continue the failed policies that are at the root of our current economic problems.”
Peter Schiff is president of Euro Pacific Capital Inc, and a frequent guest on CNBC, Fox News, and Bloomberg Television. He is often quoted in major financial publications and is the author of the book Crash Proof."

Ron Paul, a 10-term Republican Congressman from Texas's 14th District, is currently the ranking member of the House Financial Services Committee's Subcommittee on Domestic and International Monetary Policy, Trade, and Technology. He has been named "Taxpayers' Best Friend" for 10 consecutive years by the National Taxpayers' Union. Ron Paul is also the author of several books on monetary policy and economics.