Rescuing our hurt economy

By Magdelini Ioannidis
Collegian Reporter
January 23, 2008

Because of fear of a coming recession, the government is scrambling to find solutions. President George W. Bush is giving the United States a break, with a tax relief of close to $150 billion. It is proposed that those who are single will receive $800 and married couples will get $1,600, accourding to answer.yahoo.com. The problem with this plan is how people will spend their newly acquired money.

The government hopes that the distributed money will go straight back into the economy. However, data are revealing that most people just want to pay off any debts that are owed. This debt includes credit card bills accumulated from the previous year and also recent holiday shopping. Some people are arguing that money will never return to the economy and the effects will be very immaterial. Economists say that paying off debt is not the stimulus that will trigger the necessary rally in the markets. Supporters are arguing otherwise.

Many people just want the money for everyday spending. Others need some extra money to fill up their gas tanks due to high prices at the pump. Another issue at hand is how fast people will spend their free money. According to the Washington Post, in the last rebate from 2001, people had spent their money within six months. A definite success, it only took one month after rebates checks were sent out, putting an end to the recession that had loomed that year. With the Dow Jones Industrial Average dropping significantly, a consumer spending increase is urgent if there is any chance to rally the markets. Although this is not a permanent fix, this money hopes to temporarily boost the economy.

The bigger factor in the tax breaks is concerned with who is receiving all of these rebates. The government is not very forthcoming with explaining any of this. Both political parties have thier own opinion. According to the San Francisco Chronicle, a family of four with an income ranging from $24,000 to $40,000 would receive the full benefits of Bush’s tax relief. This excludes anyone who is unemployed or receiving any benefits from social security. This would affect millions of people in America and is proposed by Democrats. On the other hand, Republicans believe that any family with an income of $100,000 or more should reap the benefits of the government's payments. In the end, those receiving the rebates will be those most likely to spend their money quicker so the economy can rebound before the country goes into a full recession or even a depression.

ioannidism1@lasalle.edu