A Real Stimulus Package

There are all many problems associated with the existing individual stimulus planned for the consumer.  It is to small, too late, comes in dribs and drabs, and there is no assurance that the money will acually be spent on anything.  If the rebate is supposed to cost $200 billion, and our population is approaching 306 million, that comes out to about $650 which is roughly consistent with the current proposal.  That’s probably not enough.

To help the people affected by Katrina, the government provided $2,000 debit cards.  Although there was some abuse, and some fraud, by and large they worked as intended.

Can you imagine the stimulative effect of giving every American a debit card for $2,000 or more that had to be spent within a year or six months?  Money would have to be diverted from other stimulus programs, but this would be highly effective.  There would have to be some well thought-out rules,  It could not be used for liquor, cigarettes, and maybe not even food, rent or mortgage payments, but for other types of purchases that would promote actual recovery.

They say that part of the recovery is psychological, and that would change the psychology of the consumer.

It’s a little late to be suggesting this now, but we may find we need it later on.

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