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Tax Cuts. High Interest Rates. Is The Economy Going To Hell?

Read more articles on Finance and Life and Politics.

January 14, 2008

Posted by neillevine

About This Editor: I am a writer. Have been writing for other sites, but expect to do most of my future work HERE! My expertise extends from the esoteric such as burning hydrogen to the unpredictability of the stock market and my writing makes me a jack of all trades and exasperated master of none. I have had some influence over national wildfire and water policy and there are hints of a change in energy policy, BUT as Samuel Goldwyn once said, "A verbal promise is not worth the paper it is written on."

         

Get ready for your refund and the extended benefits you are going to need because while a tax, or other, rebate might be popular, it does not solve several basic problems that dog the national economy, but it will make people happy and impress them with the caring way Washington does things.  .

All the leading Presidential candidates, such as Mitt Romney, Barack Obama and Hillary Clinton, Congressional leaders, such as Senator Harry Reid and Speaker Nancy Pelosi, and even the current resident in the White House, George W. Bush, are in favor of economic stimulus, so it would appear to be a done deal sure to pass in one form or another, given the vagaries of Congressional back room negotiations, motivated by five percent unemployment, a statistic not that distressing by historical standards, but with expert stock analyst talk of a possible recession and with market worries showing up day after dreary day and doubtful consumer confidence, though they rarely give much credence to the ups and downs of the Dow or Standard and Poor’s and other market indicators, the current political leadership appears to have been paying attention, caught on quickly, and seems to be acting promptly on what they view needs to be done to right the financial ship of state.  Expected poor fourth quarter economic numbers would only tend to back up this scenario.

So what can be expected and what will be done?  What good will it do?

Those are the multi-million dollar questions that ought to be answered.

Well, to start with, the federal reserve is scheduled to meet at the end of January, while the Congress is just about ready to make a come back.  An overall interest rate cuts would reverse the actions that the fed has previously taken.  It should provide liquidity, that allows people and businesses to obtain loans for whatever they think they need.  A tax cut or rebate will put ready money in people’s hands and increase demand, that is, help sales of whatever goods are being sold.

On thee other hand, less revenue for the government means an increased deficit short term.  Increased economic activity should result in increased imports, making the trade deficit worse.  Now, it is true prosperity is better than recession and a growing economy will more easily provide income for the federal government, but there is always the specter of inflation.

With gold at nine hundred dollars an ounce, I believe investors in some ways expect the worst so while it is nice politicians are showing they care they aren’t solving real problems like the balance of payments deficit and the very high price of crude all.

Let me assure you that while John Edwards and Hillary Clinton’s money is parked safely somewhere, you can’t run a business based using Washington as a role model for success.  No way.

Last 5 Entries by neillevine

• Tax Cuts Follow The Bouncing Interest Rates - November 3rd, 2008
• Fund Raising, Jobs, The Future Of The Economy - October 24th, 2008
• Term Limits, Debates, Speaker Pelosi Investing - October 17th, 2008
• Economics=Dismal Science. Budget Deficits Balance Of Trade - October 14th, 2008
• Cam Getting Osama Bin Laden Boost Confidence - October 8th, 2008

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