So the breaking news banner on CNN (online and on TV) is touting the fact that the House has passed a stimulus package which includes tax rebates for individuals and families.
While I haven’t seen the final numbers that are in the bill, nor do I know if the Senate will pass a similar bill, NOR do I know who will be eligible for these rebates, I can tell you that the whole idea of tax rebates are no different than putting a band aid on a gaping chest wound.
There are so many things wrong with a quick temporary “fix”, which may very well help some (or many) families in the short term – whether it be paying bills or whatever else they may do with the rebate checks. For starters, as bonddad and a number of others have written about extensively, the economy is pretty much completely in the shitter – no matter what metrics you look at. There was just another article today that indicated the housing market “downturn” has yet to hit bottom. People are paying their mortgage with their credit cards and then can’t pay their credit card bills. It won’t be long before people go into default on their credit cards (if they haven’t already) and then can’t pay their mortgage.
The price of oil has skyrocketed, sending the price of gas, food and just about anything else that either uses gas or oil or petroleum based “products” to make or transport through the roof. The dollar is weaker than it was last week, which is weaker than the week before that, which was weaker than the week, month and year before that – which may only be good for foreign tourism since goods are still cheaper than they are in other countries – even in Canada.
Of course, the whole “you can’t get into or out of this country without being violated in at least two or three different ways” has put a crimp into that as well.
But I digress.
Let’s look at what the likely use of these “rebate checks” will be. I can think of a few categories, and what the likely result is (short term, medium term and long term). As the missus said to me this morning – it really doesn’t matter who gets these checks or what they are used for – they will just go right back into the pockets of Bush and his cronies. and you thought I could get riled up…..
The smart thing to do would be, of course, to deal with the root causes of this recession as opposed to a small band aid patch, most of which ultimately will not be used for anything that will be a mid to long term solution.
Tax rebates being used to pay down debt
OK, so some people will use this to pay off some debt. It could be credit card debt, it could be part of a past due bill for heating, telephone, medical bills, rent or mortgage. So where does all of the money that each lucky individual gets ultimately go to?
Yup – the same corporate interests that are at the root of the problem for higher credit card interest rates, the banks that had a big hand in the housing crisis, the oil, phone or utility companies or the insurance companies who are overbilling the ones who are lucky enough to be insured but are denying claims.
How does this help those who really need help – not just a few hundred dollars that won’t even begin to address the underlying causes of their trouble?
Tax rebates being saved
If someone is at the income level where they are eligible for a rebate and can actually stash some of it away, that doesn’t go back into the economy and therefore won’t do much to address the underlying issue here. Coupled with the declining dollar, these savings may not be worth all that much in the grand scheme of things – especially if nothing is done to strengthen the value of the dollar vs. gold and other countries’ forms of currency.
Tax rebates being used for additional current expenses
Maybe now people can afford another tank of gas, or another gallon of milk. Of course, the higher gas prices has contributed to the higher cost of, well, gas – not to mention milk and many other items that I noted above. Once again, there is nothing that will contribute to addressing the root cause of the higher gas prices, higher food prices or higher price of utility bills, and may other items that most people need on a day to day basis.
So who wins with these rebates? Short term, maybe people have one less mortgage payment to worry about, or one less creditor banging on their door, or one less credit agency who is harassing them, or may be able to actually pay for heat during the winter.
But, where does this money ultimately go? And who does this actually help? And what underlying problem or cause does this really address? And of course, how will this be paid for and who will ultimately bear the brunt of the costs?
Mid term, this will not help anyone – other than those who will be on the receiving end of the checks that millions of Americans will now be able to write. Long term, this is yet another disaster in a long line of disasters from short sighted thinking and behavior.
This “stimulus package”, regardless of what final form it ultimately takes, will NOT stimulate anything other than the profits of the credit card companies, the banks, the oil companies and anyone else who will be receiving the ultimate benefit of the lion’s share of these rebates (and of course, business tax cuts too – for the double benefit for corporate interests).
It is nothing more than a bad shell game and yet another cruel joke on We the People.