That the Economic Stimulus Act of 2008 will successfully mitigate economic slowdowns over next year.

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. 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. Con.1-Tax rebates work Sub point A-Tax rebates Little-a -Will work 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. Little b- Have 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. 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." Con.2 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. As far as concerns about where the money is coming from or etc. here is something from Eric Tymoigne. "If the trade deficit is an issue, it is in relation to the previous point. The problem is not a financing constraint, that is, that one day the United States may not be able to borrow dollars from the rest of the world to finance its imports. Indeed, the United States has a dollar- denominated monetary system and so can print as many dollars as it needs to finance its expenditures. In addition, the rest of the world cannot save any dollars before the United States injects them into the world financial system via its current-account deficit. Thus the problem is elsewhere. It is that currently the private sector, more specifically households, is the only U.S. sector capable of satisfying the rest of the world's net desire to save. But U.S. households have reached a point where their income is insufficient to satisfy the desires of the rest of the world. Therefore, households must borrow dollars, not from the rest of the world that wants to obtain dollars, but from domestic banks that do not need foreign dollar savings to refinance themselves because they have access to the refinancing channel provided by the central bank.2"