DawgTalkers.net Forums DawgTalk Tailgate Forum 2nd Stimulus Check in the Works?

Ideas for 2nd Stimulus Cover Broad Swath
by Jeanne Sahadi
Tuesday, October 21, 2008provided byCNNMoney.com

The drumbeat for lawmakers to do more to boost the economy is growing louder. And the chances have increased that Congress could pass a second stimulus package during its lameduck session following the presidential election.

Over the weekend, Ed Lazear, the president's chief economic adviser, said that at least "parts of the country" are already in recession.

On Monday, Federal Reserve Chairman Ben Bernanke told House lawmakers that "consideration of a fiscal package by the Congress at this juncture seems appropriate" given the risk of a "protracted slowdown."

And the White House said again that President Bush would be "open" to ideas for a second stimulus package, although press spokeswoman Dana Perino added that the administration would want to see details first before signing on. The administration believes that many of the proposals being discussed would not stimulate the economy.

Subtext: one person's idea of stimulus is another person's idea of pork.

Indeed, the path to enacting a stimulus measure is fraught with political and economic complexity. It has to be timed right and contain the right measures. It's more art than science.

What's Being Discussed

Democrats have been pushing for a second stimulus package for months. Many of their proposals have featured direct cash assistance, while Republican plans have been focused more on providing tax incentives and tax breaks.

Among the proposals from Democrats: extend jobless benefits, increase food stamps and invest more money in infrastructure projects to create jobs in the near term.

Critics of the infrastructure spending idea say it takes too long to work as economic stimulus. But proponents say it can create jobs if the money is put toward projects that are ready to go but for the funding.

The American Association of State Highway and Transportation Officials estimates that $18.3 billion worth of such projects are pending.

Democrats have also called for a moratorium on foreclosures and for making permanent a temporary increase lawmakers passed last February on loan limits for mortgages that may be backed by Fannie Mae, Freddie Mac and the Federal Housing Administration.

The temporary increase on those limits to $729,750 was intended to make mortgages in high-cost areas more affordable. Previously, any loan over $417,000 was subject to higher rates. Under current law, the loan limits will fall to $625,500 next year if no changes are made.

Democrats have also been pushing for a reinstatement of seller-paid down payment assistance, which was prohibited in a housing bill signed into law this summer. The Federal Housing Administration, which backs affordable loans for borrowers with low-income or less-than-stellar credit, has said down payment assistance leads to too many homeowners defaulting.

Democrats, however, have been proposing more restrictions be placed on the provision so that it would result in far fewer losses to the FHA.

Republicans would prefer that stimulus measures include more tax breaks than direct payments. Among them: a temporary reduction or elimination of the capital gains tax on stocks and lower income tax rates for companies that buy distressed assets.

House Republicans are also calling for purchasers of homes that are not primary residences to be entitled to the same capital gains exclusion as owners who sell their primary residences. Currently, a single homeowner can exclude $250,000 of capital gains on a sale, while couples can exclude $500,000.

The proposal would only apply to people who bought second or third properties over the next 18 months and held their properties for at least five years.

"This could help take foreclosed properties off the market, raising home values," said House minority leader John Boehner, R-Ohio.

The presidential candidates, whose crisis-related stimulus plans differ in most ways, nevertheless both call for suspending the income tax on unemployment benefits and temporarily exempting seniors over 70-1/2 from having to make any withdrawals from their IRAs and 401(k)s.

Meanwhile, Bernanke suggested to lawmakers on Monday that they include measures "to help improve access to credit by consumers, home buyers, businesses and other borrowers."

Among the possibilities, he suggested that there could be more direct lending from the federal government to states - which are suffering from a budget crunch - as well as to consumers and businesses. Tax credits are another option, he said.


Not Just the 'What' but the 'When'

Economists caution that any stimulus package must be well timed or it risks doing more harm than good.

Of course, that's easier said than done.

Bernanke said Monday that stimulus should be enacted when things are at their worst.

"Any fiscal package should be structured so that its peak effects on aggregate spending and economic activity are felt when they are most needed, namely, during the period in which economic activity would otherwise be expected to be weak," Bernanke said.

But Lakshman Achuthan, managing director of the Economic Cycle Research Institute, thinks ideally the best time for stimulus is at that crucial turning point between recession and recovery.

"[It] would be most effective if it hit the economy when it was already on the cusp of an upturn, thereby creating more of a V-shaped recovery. As of today, we do not see any sign of recovery in the next few months," Achuthan said.

Of course, the lag time between when legislation is passed and when it goes into effect can be two different things. The first stimulus package was passed last February. It consisted mostly of tax rebates. The rebates were first sent out in late April and continued into the summer.

The verdict on the effectiveness of those rebates is mixed to negative: While they boosted consumer spending in the short-term, they didn't do so nearly as much as they boosted consumers' savings or ability to pay down debt, neither of which is considered a short-term boost to economic activity.

The initial outlay for that first package, which also included business incentives, was $168 billion. This time around, depending on which measures are used, the cost could run between $150 billion and $300 billion.
Copyrighted, CNNMoney. All Rights Reserved.

Here's my idea for stimulus package.

Create incentives and import tax rulings to encourage those manufacturing jobs that moved overseas, to return to the US.

Take the 20 or so billion we spend on foreign aid, and use it to start rebuilding Americas infrastructure, which would create work for Americans.

Fix the judicial system, so frivolous lawsuits will not be commonplace, this will lower insurance rates, which means lower malpractice insurance, auto insurance, business liability insurance. Which in turn trickles down to the consumer in the form of better prices, and in some cases, better service. Lower overhead for companies, means more funds for hiring employees.

Those 3 things would do wonders for our economy.

Others have posted here that the exchange of money makes the economy tick. So when the economy slows we throw more borrowed money into it to get it to move around? It sounds like nothing more than a Ponzi scheme.

The only ones who benefit from Ponzi schemes are those that get their money early and don't get caught.

"The Newer Deal" or of course "The NEW New Deal"

Heck, just do away with "punitive damages." ... $1000 for the cost of the hospital visit, $500 for the cost of emotional counseling and $250,000,000 in punitive damage for making a book where one might get a paper cut.

I think what they are trying to do is kill the economy. Reading some of the proposals makes me think they are farther out of touch then people blame Bush for.

I think we need to really clean house. I don't care if every Democrat gets replaced with another Democrat, likewis with the Republicans.

By frivolous I mean, 10 million to granny who got coffee at McD's every morning, and didn't know it was hot?

Or the guy that sues the dry cleaner because they lost his pants.

or the idiots that didn't pay attention to the "Warning, flammable: Keep away from flame" then proceeded to put it next to the water heater, which ignited the substance and burned the men. They won 8 million from the glue manufacturer.

or the guy that worked for the city, and backed the city truck into his own personal vehicle, then sued the city for damages.

We hear about them everyday. That's what I mean by frivolous, lawsuits, so ridiculous that you know it's the combo of a scumbag lawyer, and some loafer looking for a quick buck. Sad thing, is the lawyer will take 70%.

Quick question about the first stimulus check....

I had my refund direct deposited into my checking account. Is that how the stimulus check would have came as well. I never received a check or a notification it was deposited from Uncle Sam.

Now that this is on my mind, I'm going into my online checking account for verification.

Yes, if you used direct deposit with your refund that is how the stimulus check would have come.

I did see the other day that the last of the checks were just sent.

Thanks Jules. And I did find it in my past statements as direct deposited.

I would've posted sooner, but it seems the board had trouble loading the last 10 minutes.....

You didn't notice like $1000 extra in your account until now?

He's rich! Hurry, let's all hate him!!!

He might be one of those guys that doesn't check what's in his account, until the ATM refuses to give him cash.

Or he could be one those guys like me,...the wife handles it ALL,....

Haha...you guys all suck!!!!

I am all online banking.....and forgot to check over the deposits that month. And it was only $600 :-(

You got it right too - I usually only see my balance when I pay bills online and "win" money out of the ATM. My pin always comes up a winner baby!!!

If they give me another stimulus check, (if its soon) I'll be stimulating Nashville's economy in December when the Browns play there.. otherwise that check will pay my season tickets next year.

That's the whole thing about these stimulus checks,...they're so small, all they do is provide a small offset against money YOU WERE GONNA SPEND ANYWAY.

You want to stimulate the economy ?? Give everybody something to cheer about,...6,7,8, grand. $600 bucks apiece isn't stimulating anything.

Oh I dinno buddy.. 600 clams will offset my Nashville bar tab quite nicely.

NOOOOOOOOOOOOO

I know we all would like a little extra cash in our pockets but let's think about it...when the government gives you a check, they will have to pay for it somewhere/somehow.

How did you get 600 bucks ? All I got was 50 lousy bucks. That can't even pay groceries ! I could use a little more stimulation, please.

Not to defend the Government or the IRS, but it was supposed to be a function of what you paid last year,....that, or somebody made a big mistake. I haven't heard of anyone getting less than 600,....

I got zero. But I'm not complaining about that either.

My "understanding" was if you got one at all, 600 was the minimum.

From Economic Simuls Payment Q&A on IRS site

Quote:

---

An individual with AGI of $80,000 and federal income tax liability in excess of $600 would qualify for a basic rebate of $600. Because this individual’s AGI exceeds $75,000, however, her rebate is reduced by $250 (the credit is reduced by multiplying the amount of AGI over $75,000 by 5%). The taxpayer receives an economic stimulus payment of $350.

A married couple with two children, AGI of $160,000 and federal income tax liability before the child tax credit exceeding $1,200 qualifies for a basic rebate of $1,200 and an additional qualifying child credit of $600 for a total rebate of $1,800. But because the couple’s AGI exceeds $150,000, their rebate is reduced by $500 (the amount of AGI over $150,000 multiplied by 5%). The couple receives an economic stimulus payment of $1,300.

---

It was "phased out" as income increased, just as the first one was.

Here's what they should do. Take that $700 billion or whatever it was, and give each American a cut to use to pay off all their debt. Then, Americans would have all kinds of money to put back into the economy!!