Stimulating

A rambling soapbox comment on helping the economy. I will clean it up later....

As happy as I am to see Congress acting fairly quickly and cooperatively on an economic stimulus proposal, and I recognize that such a thing could have a positive impact, I have concerns about how the household tax rebate will be spent.

I like the parts of the proposal that focus on helping businesses expand (a peek at the plan). But the personal rebate part of the solution leaves me wondering if we've forgotten part of the equation. I understand that if even half of us ran out and spent or invested all of the couple hundred bucks we get, the economy would feel a poke. Like a jump start or defibrillation, maybe a household cash infusion would put things back on track and ready to chug along. But maybe we'd be propping up a dying entity. Sometimes the only real cure is not a jump start, but a new battery. I see no new batteries in our future.

The United States national debt, according to the Treasury Department's own calculations is over 9 trillion dollars. Our current balance of trade (exports versus imports) means we are dependent on other countries for most of the tangible stuff we buy. The most recent figures (November 2007) show we imported $730 billion dollars' worth of stuff more than we exported--in one month. Check out the value of our imports from China over the last few years, or any of the other countries we trade with. I'm not a big fan of growing increasingly dependent on others; a little dependence is nice, too much and we become hostages. (Um, heard such arguments about foreign oil dependence, anyone?)

I'm no financial genius, but doesn't it make a difference what people spend money on? The rebate plan seems tied to the idea that most people will spend the money they receive, rather than save it (here's insight into how the 2001 rebate was spent). Fine, I'll leave that be. But if we all run out and spend it on cheap clothing for our kids, we might be defeating the purpose. Maybe what we ought to do is encourage this temporary windfall be spent on good quality, domestic (or balanced trade nations') services and manufactured products.

Before you head out to spend your rebate at American stores like Wal-Mart, consider the source country for anything you consider buying (check the inside label or box--where was it made? And don't assume groceries are domestic. Even agricultural products come from overseas nowadays).

Your spending sends a message; consider the quality and nature of the business you give money to before you turn the funds over. Support buying local, and building it better (rather than encouraging the creation of more cheap crap). Balance out some imbalances, if only slightly. Not all domestic spending is created equal, and not all that is manufactured in the US is good quality. Just a few things to think about as you spend your rebate.

Instead of buying unnecessary kitsch cranked out in a sweatshop far away or poorly constructed clothes made close to home, why not use part of your rebate to invest in auto maintenance and a few American made cloth carrying bags. Then, next time you shop for knickknacks or a loaf of bread, you can can return home in a car that burns less oil carrying your purchases in something other than a plastic environmental choke hazard. See, you can boost our domestic economy and help the environment at the same time! (For plan to work you must keep your own carrying bags with you, and stop accepting the plastic bags they give out at store. You can do it.)

Michelle's suggested ways to spend rebate:
* Buy several cloth carrying bags for carting home groceries and other purchases (next day, deliver your accumulated plastic bags to a recycling bin like those in front of some grocery stores)
* Do necessary or preventive auto maintenance (can reduce reliance on oil products and prolong life of your car)
* Buy 1 or 2 products from American manufacturers, such as non-trendy, well constructed clothing, shoes, or furniture (next day donate some older clothing/furniture and check out second hand store for a few additional purchases)
* Cover cost of an hour without pay to volunteer your time with a community organization
* Purchase higher end domestic appliances that reduce your energy or water consumption
* Cover cost of an hour without pay to spend quality time with partner or kids

I like my idea and plan to promote it until someone can show me evidence that it wouldn't help. I figure how much damage could it do to encourage domestic spending?

It frustrates me that the fiscal stimulus idea phase seems to have ended with the rebate and business tax credits. What is lacking is the leadership to get a secondary message across. "Here's money, now spend it wisely. And by wisely I mean XXX." Is it wrong to expect our chosen leaders to advise us? Why are politicians so afraid to lead? And why do we let them get away with it? Maybe we know less than they do about these issues. And maybe there are well paid special interest groups controlling the message in their favor. Hmm, I may be on to something here. :)

This is a good time to remind us all that politicians are elected, and that eligible voters--whether you register and vote or not--are responsible in many ways for the direction this country takes. I cannot beg you enough--PLEASE inform yourself and take positive action. Here's a good reference for contacting politicians. It includes a lookup feature to find your Congressperson, good tips on most and least effective methods, as well as how you should address various elected officials.

Learn more about our trade deficit and debt
* Economic Policy Institute on Debt and the Dollar, 2004
* Brookings Institute on Foreign Holdings of US Debt, 2007
* Business Reference primer on Balance of Trade, what it is and how it affects economy