Thursday, August 07, 2008

The Tax Rebate Checks Were a Failure

I was opposed to the tax rebate checks as an economic stimulus, because economic history had shown that they failed the two other times they had been used (once under W in 2001 and once under either Nixon or Ford—I can't remember which). Now it appears that the data is in. Harvard economist Martin Feldstein says the tax rebates were a failure:
Recent government statistics show that only between 10% and 20% of the rebate dollars were spent. The rebates added nearly $80 billion to the permanent national debt but less than $20 billion to consumer spending. This experience confirms earlier studies showing that one-time tax rebates are not a cost-effective way to increase economic activity.
Politicians really should stop trying to "fix" economic problems and let the free market correct itself.


  1. Amen!!!

    It's like removing a bandaid. They like the slow painful process while saying, "sorry, sorry." What we need is one quick rip to get it over with!

    Who knows, a crash might even help get rid of a lot of the excess government and junk policies they've put into place. Just like CA is finding out, necessity forces you to re-evaluate things.

  2. They were a failure.

    Too much short term thinking (upcoming election) and not enough long term thinking.

  3. "Too much short term thinking (upcoming election) and not enough long term thinking."

    This isn't a revelation. It is common knowledge. Hence Bush's historically low approval rating.

  4. Well, Democrats at the time were saying that the stimulus money should have been spent on the food stamps program. Economists agreed that that was the best way to make sure the money got spent. But Republicans didn't see any political benefit of that idea, which was always more important to them than actually stimulating the economy.