My general assumption is that the trickle down approach is fine in a growing economy, or mild or shallow recessions. So BushCo has tried what Reagan tried (did Bush1 lower taxes? Don't think so), and you see what an absolute failure that is.
First, that bill which was so urgently needed will not help for another 3-12 months, depending on what that braintrust is doing at the moment.
Secondly, we're no longer in a growing economy. This is depression like economy. This could be hyperinflation, or stagflation, but right now looks most like the Great Depression II. If so, you (Gov) had better get money into the hand of people to pay their bills, buy some more crap from China, and boost the economy.
If they continue to believe (as someone here suggested) that trickle down from the Wall street crooks and the big three is going to help the people, that would be a mistake.
What we're really talking about is unfreezing the economy. Nothing does that better than money flowing up, trickle UP.
140M workers will mostly recycle their savings immediately into the economy, or pay down debt.
They'll need to re open circuit city and best buy will have lines at the checkout again.
Now, this is not the best solution since all these goods are mostly made in China/elsewhere, but at least it will unfreeze the markets and put people BACK to work.
We're on the cliff between the current fake 6% unemployment, staring right at 20%.
Yes, the debt was 5.5T 8 years ago, and now the ceiling is 11.3T, and my suggestion would increase it to 12T.
The debt argument is long lost.
As I recall back in the day, "WE JUST OWE IT TO OURSELVES!" and "IT DOESN'T MATTER!".
It looks like it does, but we won't find out for another 2-5 years when the dollar is worth less.
EDIT: McBear, it would have been smart to not rack up the 5.5T to 11.3T in the last 8 years, and instead have had some for a rainy day. NOW is the time to rack up the large debts!!! Still, one might start to wonder where the money has gone. Everyone is or will soon be broke. The local Govs are or will soon all be broke. The corporations can't get loans either.
Where did the money go???
It was not there to begin with is probably the correct answer, but if it did go somewhere, it is overseas and probably in a swiss bank account.
I fully agree that getting money in the hands of consumers is a good idea BUT, in the current economy, what kind of money? Borrow $1T, much from foreign investors and spread it to 150M workers comes to about $500 per month for a year. That will help many folks catch up or maybe spend up some but it does nothing to generate continuing GDP on the short end. Until consumer confidence is improved folks will just squirrel away as much as they can, with good reason.
Tax cuts and rebates work if the economy is good. When the economy is bad you put money where it will impact the most people the quickest with the biggest bang. Sending much of it to China with an increased trade deficit would not really cause that bang.
Bailing out the car companies or the financial sector are not great ideas. They fail on several levels. But to reestablish confidence in the banking system much of the bailout was necessary. To keep the hedge fund floats intact, much of the bailout was necessary. It was not intended as a parachute for the CEOs, it was intended to boost confidence in the system and to get commerce kicked off again with a strong foundation.
With the auto companies, under most circumstances, you loan them enough money to smoothly go through Chapter 11 and be done with it. These are not normal circumstances.
Much like everything else that the media covers, they have quit focusing on the true dangers that this economy is in. It is old news. But the reasons that brought everyone to DC to work on the bailout are all still in play. Some to a lesser degree but still in play.
Paulson is not doing a good job of instilling confidence in the consumer. So far all he is doing is propping up Wall Street on the surface. I assume more foundation work is being done under the covers.
To your question "what has happened to the money". Well, nearly $6Trillion has gone overseas with the trade deficit in the past eight years. Another Tril has gone to Iraq. Some of the rest has gone away with depreciation of the dollar and unemployment as appropriations exceed revenue.
Or maybe it is all at a strip club in Daytona Beach.