I’m just curious because I don’t know much about politics and I’m trying to make sense of all of this. If I am right or wrong, let me know, and back me up with sources. But, where is the money for the economic stimulus package for 2009 coming from? My gut tells me it’s coming from the people…
The first thing you need to know is that the government does not earn any money. Everything they spend comes from taxes just as you have suspected. You have hit the nail on the head, if the government would cut taxes and allow the people to keep their money, they would be better off and more able to support themselves. Unfortunately, too many politicians feel that they are better suited to decide what should be done with your money and who should have how much. So they therefore take it from the working people to redistribute it as they see fit.
When the government spends more than it takes in in taxes, it issue bonds that are sold to investors and banks , and over the last decade, mostly ones in Japan and China. The taxpayers of the US must pay interest on these bonds until the government runs a surplus and pays the money back. They will have to issues the bonds to cover the short fall whether it is due to an increase in spending or a decrease in taxes and both are thought to stimulate the economy and will be included in the stimulus package.. There is a lot of debate among economist about which will be more effective. Since many people are now saving, they may also save their tax cut, and not spend the money, so it will not create jobs in the economy, but it takes time for the government to spend money so it might not help soon enough to prevent a large increase in unemployment
The money is coming from future taxes that the US government will impose a few years from now. Because the US government is borrowing the money now from investors by selling them US Treasury Bonds.
Your argument would make sense if the government wasn’t able to borrow money and had to collect taxes immediately in order to pay for the stimulus package.
Nobody knows the future. The government is hoping that the economy will be better in the future than it is today. And everyone would be able to pay more taxes in the future without too much hardship. But whether this optimistic expectation will come true or not remains to be seen.
Borrowing a lot of money is risky. Many people have recently found this to be true. And when the government borrows and spends a lot of money. Then this is risky too for all taxpayers and for the whole country.
There are two sources, depending on what part of the bailout we’re talking about: call them fiscal and monetary.
On the fiscal side, the Treasury Department spends money from the U.S. federal budget — and that money as always comes from a) taxation and b) borrowing (which is to say, selling treasury bonds to the public). This is the “TARP” money and the automotive bailout money, for example.
But another source of money is the Federal Reserve, which literally creates money from nothing (they can do that), and they inject this cash into the banking system and send it to foreign banking systems for when foreigners need US dollars.
Both sources are being used to try to stimulate the economy. In the effort to stimulate consumer spending, lowering taxes certainly would help, and that is one form of “stimulus”, but a lot of people want the government to directly do the spending instead.
It depends on how much money will be printed as a result of the package. Most likely they’ll print the money which will eventuallly raise prices so that our wealth is the same as before the package. But it’ll take a while and during that time, it’ll help the economy. People forget to factor in the money multiplier effect of fiscal policy too.
IF things work out as the government hopes, then regardless of whether they print the money, the increased economic activity will hopefully increase tax revenues.
you could be right. The problem with your conclusion that lowering taxes would do the same thing is that it takes time to pass a bill to lower taxes. So, sending a stimulus check would work faster. But, good observation by you.
Well a poll came out with 90% of Americans supporting it and a few republicans made a few comments until the polls came out that shut them up. I think are war against American industry has brought out a sleeping giant the world can not compete with and just think if Americans spent on products they made! Buy American is a internal policy acording to the White House and exempt to trade law like a sales tax!
>Where is the money for the economic stimulus package coming from?
Debt.. The US Treasury is issuing new debt for you and your children to repay over the next 30years in exchange for some cash from places like China or Japan.
Sadly, it’s mostly just being “printed.”
Instead of taking your money by taxing it, their letting it stay in your wallet but reducing its value.
It’s been done before and has a 100% track record of harming economies, not helping them.
Hey, no fair. Politics and thoughts just don’t go together.