Ali’s blog

Mostly quant stuff with occasional digressions

More on Bush’s fiscal stimulus

Posted by alifinmath on January 29, 2008

An FT column by Clive Crook:


The president’s haste to design a fiscal-stimulus plan in co-operation with Congressional Democrats was almost as disconcerting. The deal, still tentative until the Senate has had its say, underscores the pessimism. In its own right (even assuming that it moves briskly and intact back to the president for his signature) the proposal is a puny initiative. Its mere existence, though, is a weighty political fact.

The plan’s fiscal punch will be weaker than it should have been. The fastest-acting parts of the Democrats’ proposal – more spending on food stamps and unemployment benefits – were removed at the White House’s insistence. Some $50bn (€34bn, £25.2bn) out of the plan’s net outlay of $150bn is tax relief for business, which is slow to disburse and will do little to support demand even in the medium term. The administration did compromise on tax “rebates”, agreeing that cheques for $300 should go to people with incomes so low that they pay little or no tax, not just to middle-income households. That is fine, because the poor will spend more of what they get and the only good reason for this exercise is to spur demand. But money delivered through the tax system will not get to taxpayers until June at the earliest.


On a sidenote, what does it say about a country which elects and re-elects to its highest office a man whose natural station in life would be as a building janitor? A man who, in a time of economic crisis, takes measures that will hardly mitigate the impending storm? A man who, in this time of national need, still serves vested interests with unswerving dedication? A man who doesn’t feel the least bit of remorse or responsibility at the mess he’s helped create? A country gets what it deserves. 


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