Paul Krugman doesn't know what the hell he's talking about. Why don't you take a survey of people in Oregon and ask them if ~$1K would help out? I bet 80% say yes.

BTW - if sending money back to people, is good - a stimulus for the economy - then why are lower tax rates bad? Maybe genius Paul Krugman has the answers...

The compromise is essentially a tax cut in disguise. Tax rebates return somewhere between $1.10 and $1.20 for every dollar spent. Extending unemployment benefits and TANF returns roughly $1.80 per dollar spent, a much bigger stimulus "bang", and would be effective much sooner than the rebate, which won't come until June at the earliest.

Additionally, even a well crafted package would probably not stimulate the economy. 1% of GDP is basically the upper limit on what we can afford to spend, and that's just too small a rudder to turn that big of a ship.

It's true - Bush would have vetoed a package that only had unemployment benefits and TANF increases. Wouldn't it have been better to do that than sell out our kids for this do-nothing, feel-good compromise? While it wouldn't have been popular, at least it would have been honest, and it would have put Bush in the position of nixing another popular bill.

Amazing. A rebate to every taxpayer in the amount of $300, plus another $300 for each child.

With an income cap that discriminates against those making over $150,000.

And the Socialists are still complaining.

Amazing.

Emetic -

You know, it just seems like it's just less progressive if you're asking your kids to pay back the $300 you're getting for them. A responsible program would spend less money (that our kids will have to pay back) and concentrate it where it can do the most good. That's not socialism - that's common sense and fiscal conservatism.

I just wish progressives were as worried about future generations' debt repayments on trolleys, light rail, eco-roofs, esplanades, and aerial trams.

I just wish progressives were as worried about future generations' debt repayments on trolleys, light rail, eco-roofs, esplanades, and aerial trams.

You mean the money they'll save in lower energy costs? Heck, that's the least we could do for them after those "fiscally responsible" Republicans stuck them with the multi-trillion dollar Bush debt.

When local politicians "invest" Federal tax dollars on pet projects they pretend the Federal tooth fairy is sprinkling manna from heaven: it doesn't cost local taxpapers more than a few thin dimes, were told. Yet those federally funded projects add to the deficit in precisely the same manner as tax rebates.

Igualito.

We've spent billions of dollars on trolleys and trains in the Portland Metro area, and congestion just gets worse.

We'll pay hundreds of millions more in local operating subsidies, higher state and federal income taxes on the debt, and longer transit times resulting from our rail-centric spending.

Then Sam the Tram (without a hint of irony) will beg for emergency tax increases to plug the holes he drilled into transportation budgets to begin with.

But when the Feds send a check back to ordinary taxpayers, liberals become sudden converts to fiscal conservatism. Hypocrites, I say.

Emetic-why don't you go crawl back under that red rock you came from. Troll

Nationally, people really dislike what conservatives have done to the nation. Locally, Portlanders like what liberals have done with Portland. That leaves conservatives in a tricky spot. They somehow have to drum up outrage about things that people aren't outraged about while supressing outrage about things people are outraged about.

I do find it funny that they're compelled to disagree with any point a progressive makes -- even if the point is part of conservative orthodoxy. My daughter acts that way when she misses her nap.

So, in the interest of stirring things up:

As a progressive, I believe the sky is blue on a cloudless day.

Pete:

I believe Emetic is making an analogy. Progressives whine about deficit spending when President Bush does it, but don't object when it's being spent in their own backyard. It has nothing to do with transportation (per se), and everything to do with political philosophy and economics.

Wilde/Sheketoff:

FDR doubled the size of the U.S. Federal Budget, from $4 billion to $8 billion, in six years (1931 to 1936). Doubled.

He did so in order to end the Great Depression and to advance liberalism. Bush is spending a paltry (1% of GDP) $150 billion to soften/avoid the next recession.

How can it be a good idea for FDR, but a bad idea for Bush? How can $150 be bad if mailed to taxpayers, but better if transferred directly to the States? Your dogma is clouding your logic.

I have a few issues with Chuck's arguments in this post and the information in his story on the OCPP site which he links:

1.) Money in the pockets of Oregonians generate spending and ultimately a share reaches government coffers.

2.) The bonus depreciation (Chuck and Bauer comments on OCPP site) "could" cost Oregon $90 million, however the state tax code is not fully connected to the federal code. So... it won't. The only way bonus depreciation would "cost" the state is if Speaker Merkley decided to fully connect to the federal tax code next month.

3.) Bonus depreciation might reduce tax collections in that employers can write off more of their cost initially, but this characterization fails to recognize the increased payroll and income taxes created by the electricians, machinists, plumbers & fitters, and heavy equipment operators who are putting this equipment into service.

The analogy is simple: B/O commenters have never complained about the billions of tax dollars spent on light rail or MAX. Now they're complaining about a relatively minor tax rebate. Not because the rebate is too large. Rather, because the State of Oregon would do a better job of stimulating the economy than private citizens.

Remember: it's OUR money.

Progressives seem to think that business and individual income exists only to be taxed by government. With that mindset, there is no tax rate too high, no new spending that can't be paid for with more taxes. When the proposed tax doesn't hurt most taxpayers ("soak the rich") it's very easy to support redistribution of wealth. Others believe that taxes are already so high as to discourage investment and business creation, and encourage capital flight.

Political philosophy has everything to do with the disagreements over fiscal policy and stimulus programs.

The proposed rebate already has the support of Pelosi, Reid & Company: if you think they rolled over too quickly, maybe you should go shopping for new leadership.

Another $100 billion for infrastructure spending might be a fine idea: I would like to build a few new bridges and highways that serve the 98% that don't take bikes, trams, or light rail to work.

Perhaps someone can help me out in understanding the underlying chart that shows distribution of rebates amongst the various quintiles of taxpayers. It doesn't seem to add up to me.

According to the document, the tax rebate mechanism being evaluated is apparently 10% of income, capped at $600 for individuals and $1200 for married couples, with an additional $300 per child. Meaning that an individual needs only $6000 of income to get the full $600 rebate; a family of 4 would need only $18,000 income to get the $1,800 rebate for a married couple and two kids. Most Oregonians may not get $1,000 back, but most married couples will certainly get $1,200 back, more if they have kids.

However, the rebate is phased out for individuals with incomes over $75,000 (couples over $150,000), to the tune of 5% of the excess.

So an individual with $87,000 income would have $12,000 in excess of the $75K limit, and 5% of that $12K excess is the full $600 allowance. Meaning an individual with income over $87K gets no rebate at all. And, the family of four would get no rebate if their income exceeded $186,000.

Someone please correct my math if I am mistaken. But assuming that those numbers are right, there would be no particular reason for the "Average Federal Tax Change" of the middle/3rd quintile (40%-60% income range) to be only $666 when the 4th quintile (60%-80% range) is $968 -- except if these are household incomes where single people and families are all combined based on the overall tax return, and thus presumably the incidence of married couples with children is higher in that 4th quintile ($48,311-$85,905) than in the 3rd quintile ($27,645-$48,311). And that makes some sense to me -- married couples with children are going to see significantly higher rebates for their household than singles who are limited to $600 each, and two-income families have a much better chance of coming in over that $48K total mark than individuals would have.

What I don't understand is how the top 20% of reported incomes can get 27% of the total rebate, given that the rebate is effectively a fixed amount per person that is phased out at higher incomes. Theoretically, the maximum portion that the top quintile should be able to get is something less than 20% of the total rebate, depending on how many people are phased out entirely at that range.

Perhaps some analysis on a true per-person basis, rather than per-household basis, would be appropriate? Difficult to do from the tax data at hand, I know (I've tried before) but it might shed more relevant light on the subject. I'm guessing that if the 27% number is correct, that means that more than 27% of all people are covered by the top 20% of tax returns. And likewise these quintiles do not each represent 20% of people who are subject to getting some sort of rebate (including children whose parents will get a rebate on their behalf).

In any event, if the fundamental point of the article is that the stimulus of an across-the-board rebate is a bad idea because it is not likely to be effective, I'd have to agree with that.

If the fundamental point is that it's a bad idea because most of the money is going to the "wrong" people (i.e., "The Rich"), I remain unconvinced until someone can show me that the chart prepared by the TPC is not misleading.

Assuming that these are household numbers, my "household" (it's only me) should fall solidly in the 80-90% range, but I won't be getting a check for $1,100 as the TPC chart would imply -- I'll be getting exactly nothing because of the phase-out for individuals. So that chart just doesn't tell the whole story.

Chuck, the math isn't quite so simple as that.

First off, how is it that 11.6% of the middle quintile get no tax cut at all? That income range is well below the phase-out for individuals, let alone couples, and starts well above the minimum income required to get some sort of rebate. That alone is a missing piece of the story, which is certainly not answered by the chart.

Second, the difference in percentage of filers with tax cuts (according to the chart) between 4th and 3rd quintiles is 9.8 (98.2-88.4). That represents an increase of 11% in the amount of filers getting a tax cut of some kind. Yet the corresponding increase in the average amount of the tax cut is 48% -- so something else is going on there -- i.e., as I suggested, there must be more concentration of qualifying people per return in the higher quintile (and therefore qualification for higher rebate per return).

My fundamental point remains. Attempting to draw conclusions from data about average rebates per return without any adjustment for the number of people covered per return is just flat-out misleading. Two people filing separately each reporting $30K of income will have an average rebate of $600 per return. If those people file jointly for $60K, they'd have $1200 per return (and be reported in a higher income quintile to boot). But the same people got the same amount of money either way, and that would certainly not be reflected in the data from the TPC chart.

There was an Op-Ed a few days ago by an economist in the NY Times that suggested ending the Bush tax cuts in 2009 would be far better economic stimulus than anything proposed by the White House or Congress.

The reason for this is that faced with the prospect of paying higher taxes on capital gains next year, investors will cash out this year and then spend the money on something else. And there's a lot of money to spend. This move would have the added benefit of decreasing the federal deficit rather than adding to it.

You can read it here: http://www.nytimes.com/2008/01/23/opinion/23burman.html?scp=2&sq=end+Bush+tax+cuts&st=nyt

You may have to do some kind of on-line registration to access it.

Petey,

Emetic is clearly NOT a B/O commenter, having been called a troll twice.

Can you remember a single post criticizing the capital spending priorities in Portland or the region? I can't. Nobody at B/O is ready to stage a sit in at the MultCo. commissioner's office because they wasted $70 million building a jail they couldn't afford to open. Sadly, we are still repaying those bonds, with tax money that could have been spent on things we need, like a new Sellwood Bridge.

Clearly, Progressives don't worry about deficit spending for trams, trolleys, light rail, or social programs. Marty Wilde suggested this tax rebate is irresponsible because it will saddle our children with additional debt. You will forgive me if I doubt the sincerity of progressives who cry foul when Bush grows the debt, but don't mind it much when liberals grow the debt.

If Hillary or Obama had authored this plan, the B/O faithful would be endorsing faster than Tom Brady on a residual check.

To get this thread away from MAX spending and back to the original topic of the stimulus package..............

I just saw (thanks to the Novick email) the new web ad where he opens a beer bottle.

Steve is supposed to be such a bright policy wonk, where is his comment on this current debate on the stimulus package?

So far the slogan of the first ad is "will stand up for the little guy" and the second is "will find ways to get things done". OK, I understand the need for introductory ads. They are great the first 5 times someone sees them.

I have known candidates to look straight into the camera and say "these are the issues important to me". Without gimmicks, it is amazing how much can be said in 30 seconds.

There are enough Novick supporters who read BO for me to make this appeal: If Steve isn't going to make a public announcement, could someone at least contact the campaign (don't ask me to do it--previous emails have not been answered) and have someone from the campaign post a comment along the lines of "Steve agrees with.....that -----is the right approach to the stimulus package" if not a guest opinion or something?

Because it is beginning to look like Steve wants to be elected on generalities rather than by showing us the benefit of his intelligence, wit, and experience when it comes to current events.

And anyone who responds to this with "But Merkley...." risks looking as annoying as Republicans who answer tough questions with "But the Democrats..........".

Steve is either running a campaign which discusses specific issues, or a campaign of slogans and "not Merkley". I vote for people who tell me where they stand on issues, NOT that they aren't the opponent.

Thanks for the honest questions, Pete.

First off, this specific point is not a major issue, simply because one need not even consider the question of distribution of benefits to conclude that the stimulus plan is a bad idea.

However, given that half of Mr. Sheketoff's post was about that distribution, and given that he (uncritically) passed along Mr. Krugman's analysis of the situation, I do think it is important to dig deeper into the numbers.

Unfortunately, Mr. Sheketoff has a long history of posting conclusions that are unsupported by the underlying data that he cites. This is not to say that his conclusions are always wrong, just often unsupported by the facts that he uses. And it is all too easy to confuse data with information when looking at statistics. His insistence that "the chart tells the whole story" betrays his pronounced tendency to look no further than the numbers that superficially support his point of view, and I am automatically skeptical of any conclusions which Mr. Sheketoff posts for that reason. That's not to say that I assume that he's always wrong, just that it's a good idea to always dig deeper into the source data, because it usually doesn't quite mean what he thinks it means.

Anyhow, as it turns out a recent look at the TPC site shows that they have just today produced updated tables which essentially adjust the numbers in the way I had asked, accounting for family size with regard to the tax returns filed. Those numbers paint a slightly different picture (in degree, if not in general direction).

And as I said, data doesn't always equal information. The TPC produces tables based on both "cash income" and "economic income", which use different definitions and thus slice and dice the data at different points. The site says that "economic income" is a more comprehensive measure than the more widely-used "cash income", and by that measure the numbers shift even more towards balanced distribution. That is not to say that the distribution is perfectly balanced (with each 20% of the population getting 20% of the benefit), but the imbalance is less extreme when adjusted for family size.

Note also that adjusting for family size dramatically changes the percentile breaks used. For example, in the original (cash income) table the 80th percentile break was at $85,905. When adjusted for family size, the cash income 80th percentile break drops down to only $60,839. That table shows that the top 20% receives 21.4% of the total benefits, down from the 27.1% originally cited. Like I said, not quite perfectly balanced, but a great deal more balanced than before. The fourth quintile still gets more than 30% of the benefit -- but those are adjusted incomes between $36,933 and $60,839. Mr. Krugman's original assertion that the top two quintiles are unlikely to be liquidity-constrained (based on the adjusted numbers, that's people making $37K or more) is a bit over-broad.

As I said, I think the stimulus plan is a bad idea for reasons unrelated to distribution. I'd just urge everyone to consider carefully whether conclusions drawn (by anyone, let alone Mr. Sheketoff) are supported by the underlying data.

Updated source tables are here:

Adjusted Cash Income Basis Adjusted Economic Income Basis

Ah, Chuck. Reaching again.

"People in the upper half, such as those in the 80 to 95 percentiles of the income distribution..."

So we jump from people in the upper half (that's 50%) to people in the upper 20% pretty quickly there, don't we?

Never mind that I never even remotely suggested that someone in the 80th percentile was as likely to spend their rebate as someone in the 15th percentile. Not once did I even address the question of who would actually spend the money, I've been talking about who's getting the money.

What the new tables show, Chuck, is that while the upper half may indeed get a larger share of the tax rebate than the bottom half, the upper half extends so far down into the income range (which is itself a sad commentary on the state of the country, but that's for a different post) that the upper half can't exactly be said to have "lots of financial assets" as Mr. Bernanke mentioned. I believe he was talking about someone like me, who according to the latest tables would actually be bumped up to around the 95th percentile. And the roughly 83% of us up there who won't be getting any rebate truly don't need one. If you gave me $600 cash today, I'd certainly thank you but it wouldn't really change my overall spending habits. I might spend $600 today, but I'd likely have spent $600 tomorrow anyhow, so it really wouldn't stimulate much.

But as I say, up in that range the vast majority of people aren't getting a rebate, so it's not that big of an issue.

The new (cash income, for consistency) tables show that about 55% of the total rebates are going to people in the 3rd and 4th quintiles -- that's folks with adjusted incomes from $21,348 to $60,839. I won't presume to say what Chuck would have the world believe, I'll ask: Do you believe that people in that income range are the people that Mr. Bernanke was talking about, who have lots of financial assets and couldn't use an extra dollar? Or rather, an extra $1000 or so (based on average amount for people who actually do get a rebate in those groups)?

Mr. Krugman's original assertion, which you relayed in your original post, was that 2/3 of the benefits will be wasted on people who effectively don't need the money. Yet nearly 50% of the benefits will be going to the bottom 3 quintiles (that's people with adjusted incomes under $36,933). People with incomes under about $60K will be getting about 80% of the benefits.

Do you still stand by that 2/3 assertion, in light of these updated numbers?

Let me be absolutely clear on this: I am not saying that none of the rebates will be wasted on people who don't need the money. Clearly, some of them will. What I'm saying is that the number of recipients who really could use that money is significantly higher than Mr. Krugman suggested.

And it's still a bad idea for reasons unrelated to the distribution of benefit.