Why I think the tax rebates by our presdient is a BAD idea

As many of my friends know I do support and agree with the president about 80 percent of the time. I will not agree with our Democratic Congress on this either. The two sides for a change have come to an agreement which could give the American people 850 billion dollars in tax rebates. The question is where is this money going to come from? Its going to put us more in debt with other countries. According to http://www.marketoracle.co.uk/Article1571.html we owe 600 billion dollars to Japan, 400 billion to China, owe our friend the United Kingdom 125 billion dollars. We also owe like 25 countries more then a billion dollars. We need to start taking down this debt because if we don't its just going to be worse for our future generations.

The best idea to stimulate the economy is to cut taxes accross the board! To explain, let's take a step back. By definition, an economy grows when it produces more goods and services than it did the year before. In 2007, Americans produced $13 trillion worth of goods and services, up 3 percent over 2006.Economic growth requires four main factors: 1) a motivated, educated and trained workforce; 2) sufficient levels of capital equipment and technology; 3) a solid infrastructure and 4) a legal system and rule of law sufficient to enforce contracts. It will not work because people are getting something for nothing to recieve the tax rebates no one has to work, save, invest or create any new wealth to receive a rebate. Our goverment both Republican and Democratic leaders think this will inject money into the economy. What they and most Americans don't understand is that every dollar that government rebates "inject" into the economy must first be taxed or borrowed out of the economy (and even money borrowed from foreigners brings a reduction in net exports). No new spending power is created. It is merely redistributed from one group of people to another.

The good thing about these tax rebates is it cuts taxes for businesses. Bonus depreciation," which allows companies to rapidly deduct qualified investment from their tax liability, makes new investment opportunities more profitable and attractive.This provision would increase business investment, which would create jobs and strengthen the economy. What would be even better is to extend Bush's tax cuts from 2003 which liberals are pushing to stop the cuts. One of the key components of the package is a targeted rebate that is refundable against payroll taxes. Proponents of rebates believe that people would quickly spend their rebates, thus providing a short-term boost to consumption and the economy. However, traditional economic theory holds that rebates have limited impact unless recipients believe their permanent income will increase. The rebate would also do little to change incentives to work or invest; thus, it would not be effective in boosting long-term economic growth. Tax rebates and similar cash transfers don’t stimulate the economy. The federal government cannot just wish new purchasing power into existence. The government must borrow the funds for the rebates, which means either less money available for investment or an increase in the trade deficit.

http://www.marketoracle.co.uk/Article1571.html

http://author.heritage.org/Research/Economy/wm1778.cfm

http://www.heritage.org/Research/Economy/wm1776.cfm