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for the wealthy. Most experts say that the best way to stimulate the economy is to give money to the people that will spend it. At the present time, the best stimuli would be an extension of unemployment insurance payments and an increase in food stamp allotments. By their formulas, for every dollar spent on unemployment payments, it would create over a 1.60 back into the economy. Foodstamps would generate even more - over 1.70 for each dollar spent- back into the economy.
However, for each dollar of taxcuts proposed for the wealthy, our economy would get back approximately .27 cents. So we would lose money by the Republican proposal for stimulating the economy. Last night, the Republicans were negotiating to take unemployment insurance and foodstamps out of the stimulus package - although it was only about 10% of the total.
Even if the rebate is given to working people, it will not be available until about May or June, because of the present tax deadlines already in place. Republicans are hoping that if it kicks in by June, then it will stave off the worst parts of the coming recession until at least after election day. Then, they can blame the very bad economy on the Democrats. That is the politics at play with the stimulus package.
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