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Thursday, January 24, 2008
And The Stimulus Goes Forward:
via the Economist -
President George Bush will unveil the whole package in his state-of-the-union speech on January 28th. But several details have leaked. Households will receive tax rebates of between $300 and $1,200, depending largely on how many children they have. Pressure from Democrats ensured that even families too poor to pay taxes will benefit. And pressure from Republicans ensured that even couples who earn as much as $150,000 a year will get a handout.
The package also includes tax cuts for businesses, giving firms incentives to invest in new factories, showrooms, machine tools and so on. Small firms will enjoy laxer rules on writing off expenses, and ailing firms will get rebates for taxes already paid.
To buoy house prices the package includes a rescue plan for distressed mortgages more generous than anything previously mooted. Fannie Mae and Freddie Mac—two huge government-backed firms that finance and guarantee home loans—will be allowed to buy up mortgages significantly larger than the $417,000 maximum currently permitted. Critics worry that this will only delay a necessary correction in the housing market, but they will almost certainly be ignored.
Both parties have compromised. Democrats wanted to expand food stamps and unemployment benefits, but have backed down. Republicans wanted to target the rebates at those who pay income taxes, but have reportedly agreed to extend them to the large number of Americans who do not.
Compassionate Conservatism meets the Democratic legislature, and in an election year to boot.
Labels: Economy, Politics
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