Thanks for the many positive notes about my article in today's Washington Post, suggesting a short-term stimulus through a $2000 federal Gift Card.
It's a short-term boost, not a fix for all the long-term problems with the economy, nor to replace useful infrastructure spending or appropriate financial regulation.
Tax cuts can help avoid some problems, particularly if we wisely expand exemptions from the misguided Alternative Minimum Tax, but we shouldn't confuse tax breaks with immediate stimulus.
The store on the corner struggles when there is a fall in consumer demand. That's true whether taxes are high or low, whether subprime lenders are spinning their evil ways, or whether or not the financial markets need more regulation.
And so do the store employees. The 600,000 jobs lost last month are most remarkable in that they represent only one sixth of the the total losses since the start of the recession. We need relief now, while all other plans take root.
The $2,000 gift card isn't a full solution and isn't meant to be. It's a tool we can put in the hands of every American, right now, this month.
On Monday, I'll post answers to the most common questions about the idea, plus a response to some objections. Or you can read hundreds of differing opinions on the idea at several blogs including that of MadDogMedia, Reddit, Scott Loftesness, and The Washington Post comment board.
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Great idea!
ReplyDeleteI lost a favorite restaurant near me too and I'm worried about a couple of other stores. This is better than waiting for all the other things to kick in.
Hmmm... I'll think long and hard on this one. Business owners do benefit from lower taxes (both theirs and individuals who then have more money to spend), but I see the need for a faster stimulus. This is much faster than investment projects.
ReplyDeleteGood thinking!
I really do believe in lower taxes, but such reductions become increasingly helpful only as your profits grow. During lean years, it's the fall in customer demand that kills struggling businesses, not taxes.
ReplyDeleteOne poster at the Washington Post said "payroll taxes are the biggest burden on businesses," but I can't see any owner concluding such a thing. While paying 12% of each salary certainly affects me, it has nowhere near the impact of a slow month. Or two. Or more.
Dan
ReplyDeleteThis idea was broadcast in an email dated February 1
Please email me at
bronxjack@mac.com
and I will forward it to you...see below
Jason
__________________________________
The big challenge we face in trying to “stimulate the economy” is getting people to spend money and combating low consumer confidence. Tax refunds or other stimulus checks are great but if people don’t actually spend the money then they don’t work. Even people who have a few dollars to spend aren’t going to spend them because they don’t have the confidence.
Idea proposed: direct consumer investment via the StimCard -
The Federal Government mails a "gift card" with a balance of perhaps $2,000 to every taxpayer. The card can only be used to buy products and expires in 60 days. Purchases would be made at stores and through the Internet. Only strategically-select product categories would be available for purchase and they would be listed on a website set up to guide consumers. Who would not spend this money?
Thanks, Jason. I haven't seen the email, but it's good to know other folks are thinking along the same lines. I've been submitting versions to newspapers on this since November, and only since the stimulus bill reached the Senate has there been any interest.
ReplyDeleteIn this fan site for the Washington Redskins, one poster found that Taiwan has already issued just such a card! Check out the link 12 posts down:
http://www.extremeskins.com/showthread.php?t=279947
While I don't expect the U.S. to follow the idea in the near future, I'd be astounded if there isn't another round of stimulus initiatives, and it'd sure help to include strong short-term relief along with the slower-acting infrastructure investments.