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An Economic Stimulus That Might Have Good Effect

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ThomWV Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 09:35 AM
Original message
An Economic Stimulus That Might Have Good Effect
There are currently about 11 million persons unemployed in the country according to the Bureau of Labor Statistics. The true number may be much higher but for the purpose of this discussion I'll use eleven million.

Why not provide a Federal supplement to the state's unemployment payments? Let us say that for the six months beginning March 1 the Federal Government will supplement every weekly unemployment check issued by the states by $100, prorated for recipients who's claims are less than 100% of the state's maximum.

This would put $100 per week of additional money in the hands of many of the people who need it most and who would be most likely to use it or either immediate needs or paying down existing debt, both beneficial to our ailing economy.

I recall reading one time that the difference between making it and forced bankruptcy in this country was typically about $50 per week of income; if the family going into bankruptcy had just had an additional fifty bucks a week they could have made it. Might be true and might not but I am sure that adding a hundred bucks a week to unemployment benefits across the board would provide a quick stimulus to the economy. And how much would it cost? Well, 11 million claims times $100 is obviously 1,100,000,000 ($1.1 billion per week) which would come to about $5 Billion per month, times six months comes out to be just about as much as the Auto Manufacturer's bailout but much more disperse across the nation.

What do you think?
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eridani Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 09:36 AM
Response to Original message
1. I'd say K&R
Also, green jobs and infrastructure.
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panader0 Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 09:43 AM
Response to Original message
2. Well,
I own my own small construction business. There is very little work right now. I am not eligible for unemployment.
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Coyote_Bandit Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 09:44 AM
Response to Original message
3. And long-term unemployed
folks who no longer receive unemployment checks are SOL?
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Uben Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 09:53 AM
Response to Original message
4. No, what we need are more jobs
We have got to stop throwing more debt at Americans without creating jobs. Every dime of stimulus should be based on job creation.
People would rather have a job than $50 more dollars a week. I am hoping Obama's stimulus programs do just that!

When you create jobs, you construct a means where those funds can be repaid faster and put prosperity on a fast track.


Infrastructure rebuilding would kill two birds with one stone.

Jobs, jobs, jobs!


Imagine how many jobs could have been created with the monies already given away to the banks and auto companies! Millions!

Imagine taking 4 million people off the unemployment rolls! That alone would jump start a recovery!

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customerserviceguy Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 10:05 AM
Response to Original message
5. There's a simple way to do something just like that
Stop taxation of unemployment benefits. That used to be the case thirty years ago, unemployment benefits had the same tax status as worker's comp and AFDC still have today. They started to get taxed in the Carter Administration, then the noose tightened significantly during the Reagan years (and in a fucking recession, no less, thanks so much, Bob Dole!), and all unemployment comp got taxed several years after that.

Right now, millions of unemployed people have ten percent taken out of their checks to offset the tax liabilities of getting UC, if they were able to stop that, it would be money immediately spent within the local economies of the hardest hit areas.

If it could be accomplished by executive order, there would be no need to drag it through Congress, and it would be a very quick way to stimulate the economy for the most needy.
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ThomWV Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 04:12 PM
Response to Reply #5
6. I want to thank you for one of the most usefully crafted response seen in years
This is one of the most refreshing things I have seen in a very long time. A thoughtful reply. Thank you for your answer. It improves greatly on what had just been a notion floating in my head.

To the others, I agree that the key lies in domestic employement and I'm sorry my original though was not all-inclusive. All I meant it to be was a starting point.
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customerserviceguy Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 05:36 PM
Response to Reply #6
10. You're very welcome
I used to be a tax accountant in the 1980's, and was frosted to see that my clients would have to pay tax on that money. The Carter years changes were designed to tax unemployment that was on top of a fairly sizable income. The triggers were $20K for a single person, and $25K for a married couple, that sounds like pretty low money now, but it was a decent income in 1978. The thought was that some jobs you know you're going to get seasonal unemployment in (like fishing or construction) and you took those well-paying jobs knowing that you'd be laid off every year, and would be able to collect unemployment during the slack times.
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sammythecat Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 05:00 PM
Response to Reply #5
7. I never knew that.
Edited on Thu Jan-01-09 05:00 PM by sammythecat
Your solution is so obviously sensible that I'm amazed anyone ever thought taxing these benefits was a good idea. I wonder what is done with these tax revenues that is supposedly better than letting the recipients spend it?
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SoCalDem Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 05:03 PM
Response to Reply #7
8. Removing a tax is so much simpler too than issuing checks
Edited on Thu Jan-01-09 05:05 PM by SoCalDem
one more thing they could do, is to re-instate the deductibility of interest on car loans..and make it available to people who don't file a long form..

That would stimulate car sales

and

people on SS (making less than $75K) should not have it taxed..and they should be able to work and earn as much as they can without impacting their SS checks
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customerserviceguy Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 05:43 PM
Response to Reply #8
11. Barbara Mikulski had an idea like that a couple of months ago
she would allow a sales tax deduction and an interest deduction for buying a new car. The only problem is that with low interest rates (sometimes zero) there's not a lot of interest to write off.

Also, her bill applied to any car. I remember something called the investment tax credit, it was for businesses buying property that was not real estate (or connected with the rental thereof) and as I recall, it seemed funny that it was not limited to US made goods. My tax clients could buy a Japanese computer for use in their business, and get a ten percent tax credit.

Perhaps that's another idea, allowing a ten percent tax credit on the purchase or lease of an American-made vehicle. It would offset that steep first year depreciation. And it would probably cost less than the next bailout that's expected in March. Why not give something to the people who are supporting American industry? We did it for first time homebuyers in the last tax bill.
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ThomWV Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Jan-01-09 05:05 PM
Response to Reply #7
9. I recall a lot of changes like this that all took place about the same time
as an example I recall when you could still deduct credit card interest payments. I only got to do it for two or three years but then it went away. It was useful for a little guy back then and of course these days it could make a big difference for a lot of folks - most particularly those saddled with high credit card interest. It just makes so much sense to give those folks a break and not think of it as rewarding excess. Maybe it is and maybe it isn't but right now the point is to get our sluggish economy moving again.
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