You Call This Stimulus?

We now have a few more details regarding the stimulus package that passed through the House and Senate on Friday. After reading some of the general details regarding the package, I am left scratching my head. Where is the stimulus?

Let's start from the top...tax cuts. Whoopdedo! $400 tax credit for individuals and $800 for couples. Wow, that will get me to go right out and buy a new...um, mini-cam? In 2010, it looks like this tax credit may be spread out through the entire year. That will be $7.70 per week. Yay, I can buy a few more beers each week!

The $1,000 child tax credit will be extended to folks that pay no income taxes. In other words, have some free money! First time home buyers get an $8,000 tax credit, and people buying new cars can write off the sales taxes. Ummmm...when we are losing 500,000 jobs each month, who is going to be buying a new house or car?

A good bit of the stimulus will be going to schools and education. Ok, that will help some teachers keep their jobs, and help some students go to college. How exactly does that stimulate the economy and create NEW jobs?

About $38 billion will go to improving our infrastructure. Here in PA, we could probably use that entire figure to fix our crappy highways. Nonetheless, this is the first item that helps create some jobs, but it is a drop in the bucket. Consider this....when you lose 500,000 jobs each month, and each of those jobs pays an average of $30,000, that is a loss of $15 billion in annual income. Unfortunately, most of the jobs being lost are paying a lot more than $30,000!

$42 billion in energy related investments....some of this goes to creating new energy sources, such as wind turbines and next generation batteries. Alot goes to providing a 30% tax credit to homeowners who will upgrade their energy systems at home, up to $1,500. Ok, the problem is, most homeowners are leaking red ink all over the place, and simply can not afford more improvements to their home.

Elsewhere, the bill helps the unemployed and poor pay for health insurance and more food stamps.

What I did not see in the bill was any incentives for businesses or individuals who want to create new businesses. And, the bottom line is that there will be tax INCREASES in the years ahead to pay for this spending bill. We also still need to deal with the real estate and financial system issues. Yet, we have a Treasury Secretary that has not offered up a clear cut plan to spend the remaining $350 billion in the TARP to deal with these issues.

The bottom line is that I do not see how this plan provides any renewed confidence that will lead us out of this deep recession. I suspect that the stock market will weigh in with its vote fairly shortly.

Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com