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Second Stimulus Package

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Money Money MoneyBack in June, Democrat Presidential nominee Barack Obama suggested that a second stimulus check was necessary. I wrote about it because this was hot on the heels of the first stimulus check and it appeared as though Obama was catering to the masses. In reality, he was running point on a proposal House Democrats were pushing because so many of their proposals were left out of the first stimulus package.

With the credit freeze only now thawing, with both consumer borrowing and spending down, and with the prospects of a weak retail holiday season and rising unemployment, a second stimulus package designed to give our economy a shot in the arm looks pretty appealing now. Even Fed Chairman Ben Bernanke, in testimony given before the House Budget Committee, endorsed the idea of a stimulus package. More importantly, the White House said it would consider additional spending measures; it’s not an all-out endorsement of a second package but it’s better than flat out rejection.

Before anyone gets all giddy, most experts are saying nothing would happen until after the November 4th election. As it stands, most reports are saying that most of the proposals being pushed for the second stimulus package involved measures that were dropped from the first stimulus package. Those proposals included infrastructure improvements and extension of unemployment benefits & food stamps, all told costing about $150 billion or more.

Specifically, Speaker Pelosi wants to bring back a $61 billion House-passed bill:

  • $37 billion in public works spending (infrastructure)
  • $6 billion for jobless benefits (unemployment)
  • $15 billion to help states pay for Medicaid bills
  • $3 billion in food stamp assistance
  • A stimulus check (tax rebate) of some kind, though no details

I am not a fan of the “stimulus check” concept (is it really spending if we are just borrowing from the future?) and I don’t see how all the other spending is going to stimulate the economy (it’s said that the public works spending could be implemented very quickly, thus producing jobs… but it’s public works, that just sounds like it would take a long time). Jobless benefits and food stamp assistance will lessen the pain but they don’t stimulate the economy. Finally, in most states you already get twenty-six weeks of unemployment, that’s six months, isn’t that fair?

I guess we’ll have to see what gets proposed.

(Photo: Tracy O)

{ 112 comments, please add your thoughts now! }

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112 Responses to “Second Stimulus Package”

  1. Hey, what’s another $61 billion? Funny thing is, they could’ve paid for this bill and had money to spare if they hadn’t stuffed the $700B bailout with another $100B+ of pork.

  2. Evan says:

    The idea is based on Keynesian Economics – a full exploration of the subject can be found via wikipedia but here is an excerpt (the link is included so I don’t hit your spam blockers):

    Keynes argued that the solution to depression was to stimulate the economy (“inducement to invest”) through some combination of two approaches :

    - a reduction in interest rates.
    - Government investment in infrastructure – the injection of income results in more spending in the general economy, which in turn stimulates more production and investment involving still more income and spending and so forth. The initial stimulation starts a cascade of events, whose total increase in economic activity is a multiple of the original investment

    You highlight why you understand public works moving its way through the economy; a stim check and food stamps would do the same thing (theoritically speaking of course).

  3. andy says:

    I am a supporter of fiscal stimulus to drive growth, but the government has got so many initiatives on hand with a seemingly myopic view that I question how many of these programs will actually work. For example an earlier direct to consumer $50 billion stimulus package, provided a lift to consumer spending of 0.4 percent in May, but dried up after that. Similarly the 2008 housing relief bill did not save the housing market or GSE’s – Freddie and Fannie. Despite being politically popular, both examples of fiscal action failed miserably. With the floodgates of government spending opened, it is likely that our financial chiefs and lawmakers will keep on coming back for more. We are essentially spending away our futures to save the political and financial backsides of those people who got us into this mess in the first place. When are we going to have a real long term economic plan!

  4. Geoff says:

    Of all the proposals, putting money into infrastructure makes the most sense. Our infrastructure is deteriorating (or deteriorated in many places) and bad infrastructure hurts business and the economy overall. The additional jobs would get people working and give them money to spend, boosting the economy further.

    Other than that, the rest won’t do much, and another stimulus check would be essentially pointless.

  5. MoneyBeagle says:

    I think another stimulus check is a mistake. The government doesn’t want to admit that we are in a recession, and so they’re using this technicality to get around it. If they can stimulate the economy every other quarter, then there won’t be two quarters of negative growth, and thus, no recession. At least, technically speaking.

    I’d be fine with the infrastructure as that can quickly create jobs and such, but the fiscally responsible thing to do would be to look at budget cuts in other areas that don’t tie directly to the economy versus just adding it onto the already out of control national debt.

  6. Rick Morley says:

    @Andy:

    My belief is that the first stimulus plan actually hastened the fall of Fannie Mae and Freddie Mac. Everyone was so gung ho over their $600 checks that most people overlooked another provision of the bill. It increased the amount of “conforming loans” from $417K to about $750K. Thus, it forced these GSEs, who were already facing a cash crunch, to outlay even more cash to buy these larger mortgages. Not only this, now every failed loan would cost the GSEs even more money, due to their larger size.

    It’s just another example of one part of government working against another part. This is why I advocate a much smaller government, one that isn’t so involved in every bit of the market.

    That said, I do generally supprt increased government expenditures in infrastructure. This is one area that I do believe government should be involved in. Due to lack of funding, our roads, bridges, water, sewer, and other infrastructure is simply falling apart. Meanwhile, countries like China are rapidly catching up with us, and in certain aspects are even surpassing us. Just look at China’s new Beijing airport terminal. Stuff like that shows how China is rapidly moving towards surpassing us as a world superpower.

  7. paidtwice says:

    This has nothing to do with the second stimulus check or anything but the last paragraph of your article. :)

    Have you ever looked into the actual unemployment benefits? It isn’t like you get 6 months of your salary. When my spouse was unemployed, before taxes his benefit (the maximum in the state we lived in at the time) was $300/week. This was 7 years ago now, so the benefit now is probably higher but even so, it wasn’t like he got paid what he was earning before (or, even half of what he was earning before) for 6 months to look for a new job. ;)

    It is good there is something but I wouldn’t call it good insurance against being unemployed for a short time. :)

  8. Miss M says:

    I favor the infrastructure investment but I’m biased, I’m the engineer that designs your roads and mass transit and would directly benefit. It’s true our infrastructure is in terrible shape and we will have to pay to fix it at some point, why not go ahead and do it.

  9. Yes, I am for the second-stimulus package. I am a family of 4 and my husband has been laid of from Sheetmetal Union, because there is no work, and I have been cut to 32 hours a week at my job.
    Whoever made the comment about collecting 6 months of unemployment, yes your right, you do get 6 months. Your weekly benefits in Illinois is half of what you would make at your job and after the 6 months if there still is no work due to recession, then how are we suppose to support our families? Buy food, pay bills, etc. Please answer that for me since you think the way unemployment is set up now, that is fair?

    • Conservative Jerk says:

      I have had to change careers and so can sympathize with those with “no work” but if you have a family its time to go to work… there is a fast food job available, in fgact you can work two of them. If that doent do all that you need, sell your house etc. and MOVE to a area in the country with better work. FAIR would be NO Unemployment Benefit for ANYONE that isnt injured or retarded. Taking care of truely Indegent is a moral resposibily, but taking care of you because you think its worth $25 hr to work sheet metal is rediculous. The unions prop you up saying that you are skilled workers… Training that can be done in less than a Year or two is NOT SKILLED.

  10. Rick Morley says:

    @Michelle:

    Find a job in a different industry.
    Move to a different location where there are jobs.
    Create your own job. Start a business. Become an entrepreneur.

    There are a number of options. But it takes work. You can’t expect work to fall in your lap. You have to look for it, work for it. That’s why it’s called work.

  11. bryan says:

    right on rick.

    i am sick of everyone thinking they deserve a hand out. Americans are becoming entirely too reliant on the government.

    don’t put all of your eggs in one basket, including your career. have a backup plan/side income at all times. you are foolish if you have fixed expenses that you cannot cover if you are suddenly faced with hardship.

    6 months is long enough to find a job. if you cannot find a similar job to what you held previously, take something a little less so that you can still put some bread on the table. if you cant scrounge up a few dollars an hour after searching for 6 months, it may be time to find a new place to live.

    worse case, sell your possessions and buy only necessities. by the way, the internet is not a necessity. there is the first expense you can cut.

  12. Jess says:

    I’ve sat here and read all of the comments and all have their points. We all have our opinions based on our experiences.
    Michelle I understand you:I agree with the stimulus checks, I was unemployed for 7 months. Was I looking for a job? Yes. There was nothing out there,( I had to go through a temp agency, took a month for them to find me something. I was giving a list of other temp agencies to go to and phone numbers were disconnected and 3 were not taking any applications.) I am mother with two children and a finance who’s work got cut from 40 hours to 20. Now I am currently working through the temp agency and the company that I am at is cutting hours and have gotten rid of 4 other temps due to the economy.

    Bryan: sure the internet is an unnecessary expense but that’s what helped me look for a job. (considering the majority of companies you have to apply by internet.) If you sell your possessions (that money will only last for so long and then you will have nothing!!!)

    Rick in order to accomplish the things you mentioned you have to have money or good credit or money for gas. All of that is hard to have if you not working and have a family.

    Needless, to say something needs to be done, that will help those who are in need at the economy in the end!!!

  13. judy robakowski says:

    it is not our fault that the government screwed up. i will accept any finances that the government offers to give me – that’s called survival. i need to pay my rent and buy food.

    the only one who can clean up this financial mess is Barack Obama because he truly cares and want to make things better for us. i hope the security guards are staying close to his side to protect him. i need him to show me a better world – people coming together – for a good cause -themselves.

    • If you actually believe that Barack Obama is the answer to everything that is wrong with this country you are in for a rude awakening. He has outright told every single one of up he lied about the things he would do to get elected. Every politician lies to some extet, and he is just pandering to the masses “it’s going to take time”, more like never.
      Anyway life is bad all around, make it better for yourself and don’t make the government responsable for everything in your life. It’s hard, I know, but it is more than atainable to stand on your own two feet and take care of yourself with your own two hands.

      • elaina49 says:

        I cannot believe anyone in here and I mean anyone can believe Barack Obama is a good thing for this economy—we are in for a rude awakening and it’s not going to be pretty. We all need to hold on, because that’s where he is taking us. NO WHERE: It scares me he is the president of this country

    • isabel says:

      I think Amercian need to be more realistic, Obama was brave enough to assume the responsibility of thrillion of dollars deficit inherited from the previous administration. You cannot see anyone who inspite of this reality he stood up for people who believed in him. I think being a leader of a country specially like American is tough because people are used to being content and never felt deprivation from their goverment. I think it is absolute bravery on Obamas part.

  14. glenda says:

    If you think that we are heading for a better world you are surely mistaken.What other signs does the world need to see that the good lord is coming.There are to many innocent people suffering out there.

  15. Evan says:

    I am christian, but,

    “What other signs does the world need to see that the good lord is coming.There are to many innocent people suffering out there”

    Was WWII not enough suffering for the second coming? You think this is it?

  16. Osha says:

    If they could see the big picture of how many families are going through and crooked the governments are then this world would be a better place.
    The more money they tell us we are going to recieve the more problems we will have later. We need the next president to be a man that is fearless and yet have a good heart.

  17. Dawn South says:

    I was wondering are we really getting another stimulus package and when Now that Nov. 4th is over time for congress to deside are we or aren’t we getting this check I’m a single mother and I could use this money to pay my bils and what ever is left over I will use wisely.

    • nicky says:

      Yes, I agree, I am a mother of three children. I have been laid off for two months and do job searches daily. It would really help with the bills. And school clothes.

  18. David says:

    Look! We all suffer from all this crap. You tell me why we have to cut this and that and live like caveman again. STOP funding a war that we shouldn’t even be fighting. 10 billion a month! Am I the only one that finds this mind boggling. Were losing jobs,homes and everything else. Why must we lose good men and women as well? Get the hell out of there and spend the money where it belongs rebuilding the USA not some other country that doesn’t appreciate anything. Let them keep their oil. Let them eat their oil while their at it. Quit feeding them and focus on our starving and homeless. God bless america just doesn’t have the same meaning anymore to me!!!

  19. Valencia says:

    You can tell the ones who have not been effected by this whole ordeal. They have the biggest problem with the second stimulus check and i see absolutely nothing wrong with it. Consider yourself blessed if you have not been affected by this screwed up job bush have done on the middle class and poor. At the end of the day money will have no value and we will be living off faith and love. Everyone is so selfish and angry to the point we dont and wont help one another. God has a plan where all the selfish rich people will be throwing there money in the streets to try and save their self and it wont save them. Our government done this and I respect obama to the fullest for steping up to try and fix this mess. That was apart of the rich folks plan to have us living under these conditions until god blessed with obama. People should realize this by now the devil can not do anything with out our father permission. If you never had faith in jesus before you need him now, that is the only way to survival and in the gates of heaven. People please realize this life wasnt meant to be forever and its not much left here for us. The fight isnt ours to fight its between god and the devil we need to be postive instead of being so negative. All the lord wants from us is to have and keep our faith only in him. Remember stress messes with us mentally, physically and emotionally lets over come this together and stick together rather this drought affected some of us or not. Yes, bush and our goverment has done the devil work but if they repent our father will forgive them so why cant we. God bless everyone

    • Conservative says:

      i completly agree its the rich people that are doing this to us they hate everyone but their own kind! haha come on get real

  20. Anonymous says:

    Thank god for another stimulate check.

  21. christine says:

    if we do get a second stimulus check how much do you think the check will be

  22. Baby T says:

    I Will Take A Second Stimulus Check, And I Just Bet You Would Too……

  23. Little T says:

    I think we should get another stimulus check god knows we need it .God Bless!

  24. Adam says:

    Im so sick of people sayn there are jobs out there i live in the Elkhart IN area and there are 20% jobs here at least that are taking apps… Where i work is not that slow but is getting slower by the months you would be shocked how many people are there everyday puting in apps.. This is the RV capital of the world and we have had one of the largest hits of all. Its so easy to say move and cut spending sorry my wife and I dont do ANY xtra and we are still short on our bills the only thing we have xtra is Internet yes maybe we dont need it but its one thing if not the only thing we do that cost money…I think another stimulus check is a good thing. There is not a month that passes that we dont worry about where we are going to get our food from or how we are going to pay for our home…Yes everything happends for a reason and i do put My life in gods hands .
    I just hope something happeds fast so we can feel like we can breath again

  25. Nick Lawson says:

    Durring the 2008 Election . I heard very little mentioned about helping the Poor.. I have worked consistantly all my life. And paid Taxes. However do to many health problems, I can no longer work. And I and fighting a loseing battle to get disability.. I recently learned I have colon cancer.. I could have really used the last stimulus check.. But didn’t qualify. And don’t expect to qualify if their is a Second one.. I am still an American.. But don’t feel like I have been treated like one…


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