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.
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: