Barak Obama's Stimulus package

[Eerongal]

I was just wondering what everyone's thoughts about Obama's stimulus package to help revitalize the economy are. For those who don't know, among the things that will be done:

* Provide an immediate $250 tax cut for workers and their families.
* Provide an immediate, temporary $250 bonus to seniors in their Social Security checks.
* Provide an additional $250 tax cut to workers and an additional $250 to seniors if the economy continues to worsen
* Provide relief to homeowners hit by the housing crisis.
* Provide aid to states hardest-hit by the housing crisis to avoid a slash in services.
* Extend and expand Unemployment Insurance.

So what does everyone think? Good idea? Bad idea? Just what we need?

as far as the tax cuts go, apparently you can either claim it on tax returns (i.e. get 250 more back on tax returns/less on audits) or take it on your regular paycheck (~20ish more dollars a month)

[The Jade Knight]

How in the world does he plan on paying for all this?  Government tax dollars are already lower than normal.

[Eerongal]

How in the world does he plan on paying for all this?  Government tax dollars are already lower than normal.

Well,  it's supposed to total $825B, and i *think* (this is just my guess) the money is coming from reduced government spending (also note that this is no where near the complete list i posted above of things on the list, those are the ones that impact the general public the MOST)

[Necroben]

Too little too late.

$250 lump sum or $20 a month wouldn't do me any good.  Wouldn't hurt, but probably wont see it either.

Now the value of the dollar can continue to plummet even farther.  Raising the dollar would help everyone a lot more IMO.

[GorgonlaVacaTremendo]

$20 a month doesn't help you, it's not supposed to.  $20 a month for every person moving into businesses, however, helps the economy quite a bit (in theory).  That's why it's a stimulus package and not a "bail-out the working-class" package.  The idea is when you get the $20 a month, you are supposed to spend $20 more than you normally would that month.  It doesn't really get you anything special, but it could help businesses (especially local businesses, if people spend their money smart) quite a bit.

[Necroben]

That's the thing; I plan and a lot of others I've talked too plan, to pay on/off debt.  Not pay more to others around me.  It would be nice, but the money just won't be there.

[The Jade Knight]

Now the value of the dollar can continue to plummet even farther.  Raising the dollar would help everyone a lot more IMO.

The value of the dollar plummet?  Hello!  Are you Canadian?  If you are, your statement might make sense.  If you're American, then it makes little sense:  The Dollar is stronger right now internationally than it has been in ages.

I refer you to the following chart:


The arrows and percentages are just for today, so ignore them.  What you want to look at is the little yellow and blue boxes.  The blue is a representation of that currency's strength over the last year.  The gold dot is a representation of that currency's strength right this moment, relative to the last year.  As you'll notice, the USD is doing quite well (unlike the Pound and Canadian Dollar).

[Necroben]

True, I am American.  Now go to the Canadian border and they are still asking/giving a discount for Canadian currency.  And while it may have gone up in the last one, maybe two years over all it really isn't that big of a jump.  Not from a practical stand point.  Yes the value of the dollar is traded for more.  Still won't buy as many groceries.  With virtually no GDP, where else can the value of the dollar go?

With this "New" stimulus package of around 825B added with the first, the United States has barrowed almost a Trillion dollars.  While we can make payment on that, other contries will trade the dollar.  If we can't, then they will stop trading it and the value will plummet.  With a current deficit well into the Trillion's and tax cuts already being promised; where is the money going to come from?  How will pay this "New" loan if tax money isn't coming in?

[The Jade Knight]

Roughly two years ago, $1 USD was worth about 95¢ CAD.  Right now, $1 USD is worth about $1.26 CAD.  That's about a 30% increase in value.  The American dollar is doing anything but "plummeting" right now.  In fact, the US dollar is trading stronger against the pound than it has in years, and stronger against the Euro than it was a year ago.  I follow the market a little bit, and it seems to me that the dollar has been gaining (trade-weighted) value since this recession started.

Another thing to understand is that when the US Government borrows money, it does not borrow from foreign governments, primarily.  It primarily borrows from investors, many of which are Americans.  The United States' debt is, to some degree, to its own citizens—but as generally only the wealthy can afford to buy bonds, the government generally only borrows from the wealthy.

What this means is that the roughly 10% of our taxes which goes to pay interest on the national debt is going to pad the pockets of already wealthy individuals.  Very little of it goes to foreign governments, and the only major influence national debt has on the value of the American dollar is that, if the debt were so high that our government were unable to function because interest cost so much, the dollar would likely become worthless very quickly—potentially almost overnight.  As I've shown, however, the dollar is currently strengthening, not devaluing.

[GorgonlaVacaTremendo]

Besides, if you're worried about debt, you want deflation.  If you borrow $100.00, but when you pay back the $100.00 it is worth less, you've technically made money.

And if $250 doesn't help you, as you claim it doesn't, then what good is it to spend it on bills instead of spending it on the economy?  I know it sounds stupid, but it really just sounds like a pessimisetic statement to say it doesn't help at all, but then to go out and use it to help your financial situation.  I don't know enough about the package to support it or argue against it, but it certainly seems like you're arguing two sides by saying it is unhelpful to you personally, but you also need it so badly you can't use it in the way it is theoretically most useful to the economy.

[Necroben]

...but you also need it so badly you can't use it in the way it is theoretically most useful to the economy.

I don't need it that badly.  That is where I personally will use it.  If I need money, I go work for it.  I make enough that $250, on my tax return, won't make that big of an impact.  To me.  It might help others, I don't know.

[Loud_G]

Jade, where did you get that graph? The data seems very odd to me.  (Just curious)

[Eerongal]

Jade, where did you get that graph? The data seems very odd to me.  (Just curious)

Not sure where that graph came from, however, i usually find exchange rates data from http://www.x-rates.com/ to get a feel for the current situation on a currency's value

also, as a side note, the intent of obama's plan is to provide a little relief to everyone, and (the main goal) create alot of jobs, the theory being that if we keep our unemployment rate down, the economy will right itself. If unemployment shoots too high, we could see another depression like the great depression.

[darxbane]

If he really wants to create more jobs, why doesn't he decrease taxes on businesses instead of hand a little lunch money out?  Our national debt is tremendous and we are borrowing more money from thin air.  We are robbing the church to pay the minister.  He certainly won't be cutting any government spending.  If anything, it will increase, mark my words.  The dollar is stronger than it has been in the last two years, but 5 years ago a canadian dollar was only worth 65 cents American, so it is still only recovering.  Luckily for us, most of the mortgage backed securities that blew up in everyone's face last year were bought by foreign countries.  We actually weakened everyone else's currency more than our own by giving out these garbage loans to everyone.  Maybe Barney Frank and Harr Reid actually did us a favor 2 years ago when they squashed the attempt to control Fannie and Freddie (my point in this is that are dollar is only getting stronger because the others are getting weaker.  We haven't done anything positive).

You know what would make me happy?  If every politician (especially Senators and Congressmen) who preached about how important it is for the wealthy to share with the poor would forego their salaries until the crisis was over.  You know none of them need the money, they're all millionaires.  Instead, they submitted a bill to give themselves a raise.  17% approval rating, and they feel they deserve a raise.  They shouldn't be allowed to run a lemonade stand, never mind an 800 Billion dollar bandaid.

[The Jade Knight]

I am somewhat sympathetic with Darxbane's views.

That chart comes from the University of British Columbia's School of Business exchange rate service.  We have found it to be fairly accurate—realize that it is trade-weighted, which makes it a very good functional analysis of currency value.  You can find the site it comes from here:  http://fx.sauder.ubc.ca/.  They also post historical rates, in case you want to do a comparison.