Twenty Lousy Bucks?!?!?!?!
I've posted a million times about how I think that the stimulus package is a poorly constructed pork-laden piece of junk, but one statistic from President Obama's press conference last night completely sealed the deal for me.
Let me begin with the disclaimer that Obama came across as a very articulate, intelligent person who had a good understanding of many aspects of the current crisis that we find ourselves in. The contrast between him and the former president is night and day. It's like comparing someone with a PhD to a fifth grader. Having said this, actions speak louder than words and I have been fairly unimpressed with Obama's ability to get anything done in his first few weeks in office.
Anyhow, back to the point of this post. Studies have shown that one time tax credits are much less likely to be spent by consumers than permanent tax cuts. One needn't look any further than the dumb tax rebate checks that Uncle Sam mailed out last year to see that they don't work. Yet, here we are again doing almost the exact same thing, giving individuals a $500 payroll tax credit to try to jumpstart the economy.
Do you know what a $500 payroll tax credit comes out to per paycheck...wait for it...$20. That's right, the value of most Americans' retirement savings has been chopped in half and they've lost tens of thousands of dollars in equity in their homes and the government is going to make everything better by chucking them TWENTY LOUSY BUCKS?!?!?! That's only ten freaking bucks per week. What on Earth do they think that this is going to stimulate? Sales at Tootsie Roll Industries (TR)? What in the heck can you even buy for ten bucks, a pack of gum?
You can talk until you're blue in the face about the law of large numbers and how $20 spread out amongst millions of people will have a huge impact, but I'm not buying it. People are going to take this $20 and stick it in the bank, the economy will still stink, and then this and future generations of taxpayers will be stuck with the bill.