Another round of incentives needed to stimulate economy!

By
Real Estate Broker Owner with Carousel Realty of Dyer County Tn 248435000

Here in my small city of Dyersburg,Tennessee we have several manufacturing plants with some of them tied to the auto industry.

On Friday two of the plants made an announcement of layoffs beginning in September. I believe the total people expected to be layed off is around 250 people.

One of these plants produces rubber used in cars and the other plant makes electric transformers(primarily for new construction).

The recent tax incentive that  was just passed and signed by the president should help the housing industry once people understand how it works.

I believe the stimulus package earlier this year(that sent checks to all tax payers) was only partly successful and we need one more shot!

Here is my idea:

  • Send all tax payers another tax rebate check 1/2 the amount they received earlier this year.
  • Include with the check a notice if this check used to purchase a new car (made in the USA) then taxpayer would also be entitled to a tax rebate of say $1500 that could be given to the car dealerships as a down payment on the new car(car or truck must get gas mileage of 30 or more per gallon of gas or diesel).
  • Announce the new car incentive to take effect Oct. 1, 2008 so car manufacturers can prepare for the increase in business.

You would have many many people then buying new cars and then this money would trickle down to the factories hiring employees who make materials used in these new cars.

 

These incentives in addition to the election being behind us(assuming people make the right choice for president) should jump start our economy into the new year.

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Rainer
128,997
Justin Ukaoma
Kansas City Real Estate Investments
Vizion KC

I like your creativity Mike.  But I don't think we can keep giving out stimulus checks.  Soon we wont be able to keep up with all the stimulus because each round of stimulation comes with more inflation of our money supply.  

August 12, 2008 09:02 PM
Rainmaker
462,712
Trey Thurmond
College Station , Texas Homes
BCR Realtors

I am so worried about the auto industry. Again foreign manufactures are winning out! Just like foreign oil....come on congress wake up!

August 12, 2008 11:20 PM
Rainer
10,926
Ryan Trask
3plains

Forget any more stimulous checks to pump in the economy. We still pay for it in the end and it won't solve the fundamental problems we have currently. We need to deal with our problems and better yet, shut the money presses off. We need to make our dollar stronger.

August 13, 2008 02:07 AM
Ambassador
693,710
Mike Frazier
Dyersburg Tn Real Estate
Carousel Realty of Dyer County

Stewart,John,Justin,Trey and Ryan,

Thank-you for your comments. You all have valid arguments.

August 13, 2008 09:47 AM
Anonymous #18
Anonymous
Jeffrey Tucker

Well, my first thought is that with the economy the way it is the last thing Americans need is to be going into debt.  The second is that the government will not be able to solve this problem. My third thought is that there is a flaw in your reasoning, but I'll talk more about that later.  Such a scheme would cost billions in tax money.  I believe the last stimulus check cost 168 billion.  So to give every one half of what they got last time would cost 84 billion dollars.  Now 84 billion may be chump change to the government, but even so, to take away that much money from taxpayers will definitely have a negative impact on the economy.

The flaw in your reasoning is called the broken window fallacy.  To save me the time of retyping the whole thing, I'll just quote Wikipedia.

"The parable describes a shopkeeper whose window is broken by a little boy. Everyone sympathizes with the man whose window was broken, but pretty soon they start to suggest that the broken window makes work for the glazier, who will then buy bread, benefiting the baker, who will then buy shoes, benefiting the cobbler, etc. Finally, the onlookers conclude that the little boy was not guilty of vandalism; instead he was a public benefactor, creating economic benefits for everyone in town.

The fallacy of the onlookers' argument is that they considered only the benefits of purchasing a new window, but they ignored the cost to the shopkeeper. As the shopkeeper was forced to spend his money on a new window, he obviously could not have spent it on something else. For example, the shopkeeper may have spent the money on bread and shoes for himself, but now cannot so enrich the baker and cobbler because he must fix his window.

Thus, the child did not bring any net benefit to the town. Instead, he made the town poorer by at least the value of one window, if not more."

Every time the government taxes the people to help the economy it's like breaking a window and thinking you've helped the economy.  So yes, while your plan would temporarily benefit a struggling American auto industry, it would deprive taxpayers of billions of dollars.  What else could those people have spent their money on, if this had never of taken place?  I believe that individuals, not the government, know the best way to spend their money.  Look at the market - it's rejecting domestic products in favor of foreign ones.  Your plan would in essence reward American automakers for building products no one wants.  If anything, the government should get out of the way by decreasing taxes and regulations on the auto industry and let the market take care of itself.

August 22, 2008 11:47 PM
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Ambassador
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Mike Frazier

Dyersburg Tn Real Estate
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The purpose of this blog will be to discuss the market conditions in the Dyersburg Tennessee area of west Tennessee. There will lots of useful information for buyers, sellers, bankers and other users of Dyersburg real estate information. I will also often quote other professionals. Follow MikeFrazier-Dyersburg homes on Twitter