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Government money: It is YOUR money!
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Somebody slips and falls and they sue. Often, they will sue their friends they were visiting. After all, they won’t pay the damages. The insurer will. Juries love to think that way. Since insurers print money we needn’t worry, right? Of course not, our rates go up we pay for it in the end. There is nothing such as a free lunch. Well, you ask, what about government giveaways?
We have seen those ads about the government grants. Government wants to stimulate things more than a hooker working overtime. That is all free, right? At least government can print money.
So, if the government pays you $4,500 to get rid of that clunker, that is good, right? After all, we aren’t paying the government is.
If you need new energy efficient windows, the government will help pay for them.
Build in a flood plain and have a flood. How could you have foreseen that? Let the government pay.
Even governments pay governments. The state will tell you, “don’t worry, it is federal money.” Three-quarters of my county’s budget is pennies from Heaven, also known as state and federal pass-throughs. You’ll hear debates about delaying a bridge project so the state and federal government can pay for it. Until then, live with the hole.
Even the townships get grants from the county. “It isn’t our money; it is a county grant” is often heard. And recently, the county was asking the townships to send them money. But, it is funny money. Right? It is government money.
We are in an over stimulated world of stimuli. There is talk of incentives to replace inefficient appliances. What is next?
Well, as the New York Times reports, conflict is brewing over whether Congress should extend the $8,000 first-time home buyers credit. The Times reports “When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it. As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February.”
But that is ok, because it states right there that it will cost the government $15 billion. Doesn’t cost me anything!!!
The Times reports “In the view of the real estate industry and some economists, all that money is well spent. They contend the credit is doing what it was meant to do, encouraging a recovery in the housing market that is gathering steam. Analysts say the credit is directly responsible for several hundred thousand home sales.”
Well, that is good, especially if you were buying a home or trying to sell a home or better yet, if you are a realtor.
Honestly, it also helps Home Depot and Lowes and the moving companies and companies that sell carpet and paint and it does trickle down throughout the economy. Besides, the government is paying for it.
The Times warns “Skeptics argue that most of the money is going to people who would have bought a home anyway. And they contend that unless it is allowed to expire on schedule in late November, the tax credit is likely to become one more expensive government program that refuses to die.”
Probably true. You know, 30 years or so, maybe 40, we had never heard of an auto rebate. Why would you give somebody money back on the car. Just lower the price! Then we saw Lee Iacocca come on with “buy a car and get a check.” Four decades later, rebates, whether from dealers or from the government (cash for clunkers) are a necessary inducement to get people to buy cars. You can sell more cars by pricing them at $16,000 and giving a $1,500 rebate than you can pricing them at $14,500 or even $14,400. People like to think they are getting a bargain.
The rebate for home buyers is very powerful. First-time buyers (heck all buyers) often lack cash for anything after they have closed on the house. The $8,000 can help with all those trips to Lowe’s.
But, why limit it to first-time buyers if you want to move houses? What not allow it for anyone? Or for anyone moving “up” in housing?
Heck, why not give anyone who buys a house a rebate regardless.
We already subsidize ownership through the mortgage interest deduction. This is a natural extension.
Surprise, surprise, according to the Times, “The real estate industry, including the powerful 1.1 million-member National Association of Realtors, wants Congress to extend the credit at least through next summer. The group hopes to expand the program to $15,000 and to allow all buyers, not just those who have been out of the market for at least three years, to qualify. The price tag on that plan: $50 billion to $100 billion.”
Great. That means all of us. A bail-out of the housing industry. I love it.
I was going to stop quoting the Times at this point but the next sentence got me as “Joseph and Chassity Myers are among the two million buyers eligible for the credit this year. The newlyweds heard they could get money from the government for something they were tempted to do anyway.”
They heard they could get money from the government. We should be happy for them. At least we didn’t pay for it.
As the Times said, “Their home is now a monument to the government’s generosity. They bought a leather couch, a kitchen table, a bed, television stand, china cabinet, kitchen table, coffee table, grill and patio set.”
That generous government. We must thank them.
As the Times notes, this was not the first attempt to stimulate housing. It notes “The government’s efforts to directly reward home buyers began more than a year ago with a $7,500 tax credit that had to be repaid over 15 years. Last winter, amid fears of another Great Depression, the Senate came up with a much sweeter $15,000 package as part of the stimulus bill. That measure was ultimately reduced to the $8,000 credit.
Now the sponsor of the original Senate bill, Johnny Isakson, Republican of Georgia, is back with a new bill that would give a maximum $15,000 credit to any buyer who stays in a home for at least two years.
“The problem now is not first-time buyers, it’s the move-up market — the guy transferred from Chicago to Atlanta who can’t sell his house,” said Mr. Isakson, a former real estate agent.”
Johnny Isakson, REPUBLICAN of Georgia.
I read it again. Yes, it says REPUBLICAN.
Am I in that new TV show where the whole world misses a period of time? When did this become a Republican ideal?
As you may have guessed, I don’t think cash for clunkers, first-time home buyer credits or government grants to go to school or buy a business are necessarily no-brainers.
First of all, the money does not come from the government. It comes from us. The government is being generous indeed, but with our money.
Where does the government get money? It raises taxes. It gets money by taxing incomes, goods, services, whatever.
It borrows, which with a currency based upon the national debt, means the same as printing money. The government borrows money to give you that rebate, that causes inflation and your money is worth less. Guess what? It is the same as a tax.
Government collects money via taxes (real or effective taxes) and then pays out that money to others. It redistributes wealth from those paying more taxes than they get back in government services and hand-outs to those who get more from the government that they pay in.
So, who benefits? We all like to pick on the poor and say they get government handouts. They do. They need them. They also probably could not afford that new car even with cash for clunkers or that new home even with the $8,000 credit.
Those in the middle class, especially young up-and-comers, could benefit very well these past several months, maybe combining the cash for clunkers and the new home.
Who pays? The wealthy do actually pay to some extent. Even if tax planning helps reduce their taxes, those earning for than $250,000 a year probably pay far more into the government than they get back and a lot of incentives that benefit lower incomes phase out with higher income.
But, in the end, as with everything in this country, the brunt will be borne by the middle class. Those in that category who bought a car under cash for clunkers or a home with the $8,000 credit made out. The rest of you who did neither, YOU paid for that cash for clunkers car, YOU paid for that $8,000 home purchase credit, YOU paid for your neighbor’s new storm windows, YOU will pay for any expansion of free health care.
Whenever you read that the GOVERNMENT has paid for something, it s simple to figure out who really paid. If it benefits you, you probably have a net benefit (even though some of it was a return of your taxes to you). If it does not benefit you (because you didn’t buy a home or a car), then YOU paid. Even if you did not pay taxes, you still will have paid due to the inflationary impact and the impact of higher taxes on businesses and business owners.
So, never look at a government program and think it is FREE money. It is your money!
My favorite aspect as reported by the Times, “Dean Baker of the Center for Economic and Policy Research called the credit “a questionable redistributive policy” from renters to home buyers, but said that he used it himself when he bought a house.
He wrote on his blog: “Thank you very much, suckers!””
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Cash for clunkers
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