Monday, February 18, 2008

An Intriguing View On The Economic Stimulus Package

As a longtime skeptic and occasional fan of Glenn Beck, I couldn’t help but pay attention when reading a recent article by him about President Bush’s’ economic stimulus package.

Personal political opinions aside, I couldn’t help but be interested–nay, even persuaded–by his solution to the economic stimulus probl–ahem, package. Though it is mostly honest in its intentions, it is still broken.

A disclaimer: By most accounts, my generation will not see a dime of their social security. I am not in support of certain parts of the package for reasons highlighted in Beck’s editorial. Namely, the problems concerning government mismanagement of policy and procedure.
Beck begins his column by saying,

“After Hurricane Katrina, FEMA needed to get money to victims fast, so they tried something new. Instead of issuing checks, they issued $2,000 emergency debit cards for evacuees to use for food, water, and supplies.

As you probably remember, 2005 wasn't exactly a banner year for FEMA. Along with food and water, some hurricane evacuees also bought Louis Vuitton purses, diamonds, and even breast implants. That caused major embarrassment for the government (at a time when they weren't exactly in the market for any more of it) and the debit card program was scrapped.

But while purchasing frivolous items may not have been what FEMA was hoping for, it's exactly what the government is hoping for now. Frivolous items have far higher profit margins than boring necessities like food and water, and it's that profit that will (at least in theory) trickle down to help create more jobs and eventually stimulate economic growth.”

Beck continues by claiming that if the government opted to issue debit cards rather than checks, two large problems could be avoided.

First is the issue of not knowing who will spend the money, and where. With issued checks, there is no guarantee that the money wouldn’t be invested or even worse, (gasp) saved. With debit cards, the original intention of the economic stimulus package would be guaranteed and the government would know that the money is going back into the economy. Further, with cards there would be no guarantee that each person would use their card–no loss there.

Second is the issue of time. Because we’re in the depths of tax season, the government’s first priority will not be cutting additional checks. Make no mistake: The process of cutting over 150 billion in checks will be a lengthy one,

Beck also adds,

“And debit cards also have the advantage of looking exactly like credit cards, which will reinforce the behavior that got us into this mess in the first place.”

And it's wit and wisdom like that which will hopefully get us out of it.

This was a guest post from Marie Langhout, NuWire’s Creative Editor. If you like what you read here you can find more at Marie’s blog: The Brink Tank.

1 comment:

Anonymous said...

The real point of the package is to help provide capital to the banks by having people pay back their loans.

Reeks of a bailout.