Will the stimulus actually stimulate? Economists say no

Kevin G. Hall
McClatchy Newspapers
February 13, 2009

WASHINGTON — The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won’t stimulate economic activity, according to a range of respected economists.

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“I think (doing) nothing would have been better,” said Ed Yardeni, an investment analyst who’s usually an optimist, in an interview with McClatchy. He argued that the plan fails to provide the right incentives to spur spending.

“It’s unfocused. That is my problem. It is a lot of money for a lot of nickel-and- dime programs. I would have rather had a lot of money for (promoting purchase of) housing and autos . . . . Most of this plan is really, I think, aimed at stabilizing the situation and helping people get through the recession, rather than getting us out of the recession. They are actually providing less short-term stimulus by cutting back, from what I understand, some of the tax credits.”

House and Senate negotiators this week narrowed the differences between their competing stimulus plans. In so doing, they scrapped a large tax credit for buying automobiles that would’ve caused positive ripple effects across the manufacturing sector. They settled instead on letting purchasers of new vehicles deduct from their federal taxes the state and local sales taxes on the cars they bought.

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This article was posted: Friday, February 13, 2009 at 2:47 pm

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