POFO debaters April topic, Practice only POFOers please

Resolved: That the Economic Stimulus Act of 2008 will successfully mitigate economic slowdowns over the next year. Economic Stimulus Act of 2008-The bill provides temporary tax incentives for businesses to make investments in their companies so that we create new jobs this year. The bill provides individual tax relief in the form of tax rebates. These rebates will amount to as much as $600 for individuals and $1,200 for married couples, with additional rebates for families with children. The bill also allows Fannie Mae and Freddie Mac to buy bigger loans to save form the subprime mortgage disaster. It was signed into action by George Bush on Feb. 13, 2008. Mitigate-To become milder Economic slowdowns-When the economy begins slow its economic growth, e.g. jobs, consumer products. Overview 1: The idea is to give back some money to households so that they spend. Spending means more sales for businesses, and so more profits. If firms are profitable, they will keep employing households, which allow the latter to continue to spend, and so help businesses, etc. This is how it will work. Overview 2: As the Affirmative team we must prove successful mitigation, meaning it will do or come close to what the advocates of the bill said it was going to do. Which simply means I the Aff won't be abusive, by saying any mitigation is going to win me the debate, no. I have to prove successful mitigation. Con.1-Tax rebates work Sub point A-Tax rebates According to TMC.net CBO: Tax Rebates & Cash Are Good Stimuli January 15, 2008" It said lump-sum tax rebates like the $300-600 rebates delivered to taxpayers seven years ago are among the more cost-effective ways for Congress to jump-start the economy, though CBO cautioned that rebates are more effective when given to middle- and lower-income taxpayers more likely to spend it.", So tax rebates are the best stimulus to start the economy up quickly and cost effective. This means it worked before in the past and it will work now. As they said it is more effective with the middle class and lower class. The cut off income for the rebates is 75,000 per person or 150,000 for couples. It is going to be effective because it is going into the hands of the people are most effective which makes it successful because it is given to the right people. Little b- Has worked in the past According to businessweek.com "Research Backs Rebates" by Francesca Di Meglio March 16, 2008" Conventional academic theory, according to the paper, is that consumers don't respond to temporary measures such as tax rebates. However, the researchers could match the receipt of the rebates with higher spending levels and concluded that the 2001 rebates provided a "substantial" stimulus to the economy. ", This means they have worked in the past to mitigate, so they will work again. This takes out the whole idea of it not working and shows it was a substantial stimulus, which means it is successful. And The advocates of the bill are expecting the same effects of the last stimulus package. Con.2 Business incentives The bill also provides business incentives, which have tax deduction for businesses that set up new programs, which provide jobs. These incentives simply mean, the bill creates jobs and investment which has been declining, according to Ron Scherer | Staff writer of The Christian Science Monitor from the January 22, 2008 edition," "He also estimates that would support some 400,000 jobs". Meaning the bill in all with provide 400,000 jobs. Con.3 Fannie Mae and Freddie Mac One of the biggest problems with the economy is subprime mortgages. They are mortgages that have high interest and are given to those who have risky credit. The problem is that according to Eric Tymoigne assistant professor at Fresno State University, They have contributed to about 2 million foreclosures. This means banks lose money and when that happens, they can't work with the individuals to make a deal, because, they can't. They don't have money to sustain their business. So what does Fannie Mae and Freddie Mac do, they purchase mortgage loans, and then, after pooling the loans, sell them as securities to the public. Since foreclosure is happening, they swoop in and buy the houses from the banks at the price they were loaned too and it helps the bank and the consumer. What do they do with this property; well they sell it back to the public. This helps mitigate the housing crisis, by buying up an amount of bad mortgages. Now, they already have been doing this, but there are certain properties that are so huge, that they would leave a heavy blow on the economy. The act allows Fannie Mae and Freddie Mac to buy these huge loans, to prevent disaster. This will do its job anyway in being successful because they have already done this kind of stuff before. Con.4 Sociological boost "There could be a psychological lift that ends the current gloom-and-doom atmosphere in corporate boardrooms. On Monday, the world glimpsed the depth of negativism when stock markets from Europe to Canada to Asia nose-dived. The US markets were closed for the Martin Luther King Jr. holiday. Economist Ethan Harris of Lehman Brothers offers a slightly different analysis. He estimates that a stimulus package of $100 billion could add 0.8 percent growth to the second quarter and 0.2 percent to the third quarter. "Perhaps even more important," he writes in a research report to his clients, "the policy would provide a psychological boost to the economy." This means that it will boost the economy with providing hope to all the gloom that is happening. Sub Point B Just enough to stimulate It is basic Keynesian economics, which are country is based on, one of the main reasons are economy is slowing is because people are not spending their cash. So what do you do to help the economy, you put cash in the American people hands. It is big enough, because it is 1% of our G.D.P., which according to (The Economist January 17, 2008 "Stampede to stimulus"), "1% of the G.D.P. is just enough to get us out of our funk". So the government gives money to the citizens to spend, thus spending on commodities like gas, food, or even bills. American are struggling right now, people are living pay check to pay check and this act will help the middle class, who are the ones feelings the heaviest blow. Secondly it has been done in the past and people did spend the money on the economy, but this time it is even more money. "Altogether, the government is hoping to add $145 billion to the economy. While the exact amount per person hasn't been determined, some estimates on Capitol Hill put it at $800 per taxpayer. This would be almost four times the amount the government spent in 2002, the last time it tried to stimulate the economy." Little C-Middle Class Also according to http://www.themiddleclass.org... ," a smart economic stimulus plan could prevent the downturn or soften its effects, but not just any stimulus package will do. To be effective, an economic stimulus package must direct money to those who will spend it quickly, boosting consumer demand and prompting increased production and economic growth. This Senate bill provides even more effective stimulus than the House legislation because the tax rebates are even more closely targeted to cash-strapped middle-class and aspiring middle-class Americans, who are more likely than wealthier people to spend the money they receive immediately, rather than saving it.", And that is exactly what this bill does for the American people.