I caught an interview with a local economist who was talking about the stimulus package being negotiated in Congress right now. He brought up a number of great points that I wanted to share with you.
First, he said that for any stimulus to actually work, it needs to be big and it needs to be fast, or the economy will likely come out of its slump on its own. If you compare a $150 billion stimulus package in the context of our $11 trillion economy, it's really not that big. And, Congress's politicking with the package is causing more and more delay -- it's a shock, I know -- so it is not coming fast, either.
And, depending on the final level of the checks being written to individuals, it may not work anyway. The idea behind a stimulus is to put enough money into people's hands that they do something out of the ordinary with it. Maybe they buy a big-ticket item, maybe they go on vacation, maybe they invest it aggressively. Whatever they do, the idea is to get them to put it right back into the economy somehow. With a small check, though (like a couple hundred bucks), people are more likely to just pay a bill or save it for a rainy day, which won't help the economy at all. This economist suggested that to be effective, the checks would need to be at least $1000.
Anyway, the bottom line is that this is simply an election year publicity stunt by politicians who love to hand out taxpayers' money. Again, I won't complain about receiving some of my tax money back, but it's looking like less and less of a good deal all the time.
There's my two cents.
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