Several questions need to be answered about the recently passed legislation to "refund" a portion of the taxes paid to the US Treasury. Let's begin:
1. If the government is running a deficit, where does the money come from?
Answer
The government borrows the money. Assuming the government never actually pays off this debt, it will cost tax payers over $168 Billion in interest over the next 30 years (at 3.75% interest today). So the total that my kids will have to pay off is over $318 Billion.
2. Why is it called a rebate if people that pay no taxes get money back?
I have no idea, but I guess this is what happens when politicians use taxpayer money to buy votes. So the unemployed (or non-working) get their cash and can easily make it to the ballot box.
3. What are the 2nd and 3rd order consequences?
*It is $150B that business cannot borrow to actually grow the economy since the government is using it
*It is $150B that the US Government will owe foreign governments (China, Saudi, Abu Dabi, etc)
*It is $150B that will not all be spent to boost retail sales. Some will be saved, some will be used to pay existing bills, and what is spent will most likely be spent on something made oversees. So the Chinese will get some of the money back, but we still pay interest to them. What a deal!
John Stossel can write much better than me. See his article on townhall.com
Stossel Article
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