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Bush’s “Economic Stimulus” Package

By Leslie on January 19, 2008 at 7:53 PM in Bush/Cheney, Current Affairs, Economy

Remember when Bush talked about the “ownership society”? Own your own home, own your own retirement assets, own your own health insurance…. What ever happened to that?

• The unemployment rate rose to 5.0% in December. Overall employment growth is the slowest it’s been in over 70 years. While people receiving unemployment benefits hit a two-year high.

• Consumer spending, which is responsible for 70% of the US GDP according to Bonddad, is the worst it’s been in 5 years. The retail industry is responding by closing stores and laying off employees.

• Prices for necessities, such as gas and food, are increasing. US inflation for 2007 has reached a 17-year high of 4.1%.

• Fallout from the sub-prime mortgage crisis is costing financial institutions billions of dollars in investments and an estimated 20,000 employees their jobs. For example: Citigroup and Merrill Lynch announced fourth-quarter losses this month of $10 billion and $9.8 billion, respectively. Meanwhile, CEOs involved are receiving multi-million pay packages.

• The DOW dropped 306.95 points on January 17th, extending a 2008 selloff. The broader S&P 500 (INX) index lost 2.9 percent, and fell to its lowest point in 14 months. The Nasdaq composite fell 2 percent and hit a 10-month low. The Russell 2000 (RUT.X) small-cap index lost 2.8 percent and hit a more than 17-month low. The Russell 2000 has now fallen over 20 percent from its all-time high reached in July of last year. The decline is the technical definition of a bear market.

• US housing starts drop 24.8%, to the lowest level in 27 years. Building permits fell 25.2%, and median home prices in California have fallen about 15% with no end in sight.

• Home foreclosures are expected to increase and property values are expected to continue to drop through the first half of 2008.

• The US deficit grew 31.3% during 2008 fiscal year’s first quarter.

• GWOT may cost $2.4 trillion over the next ten years.

• Median household incomes have declined about 0.3%, or about $962, for all except the richest since 2000.

• In 2006, there were 4.9 million more Americans living in poverty than in 2000.

• As of 2006, there are 8.6 million more Americans without health insurance than in 2000.

• The yen rose to a 32-month high against the US dollar.

So what’s Bush’s plan? Well, in the first week of January, Bush thought the markets were “strong” and the economy “solid.” Now Bush is proposing an economic stimulus package of $150 billion involving tax rebates. Some stimulus package is better than none I suppose. At least Bush isn’t proposing making the tax cuts for the wealthiest 1% permanent. But Bush’s stimulus plan won’t address the growing number of foreclosures, titanic war costs, the deficit, or the dollar meltdown and it probably won’t do much to restore consumer confidence either.

So how will you spend your ridiculous $300–$1600 tax rebate? If you’re like me, you won’t go shopping, you’ll pay off some bills instead.