Economic Stimulus

Thursday, January 17, 2008
An Idea For A Quick Cash Infusion Into A Sick Economy

By Dicky Neely

Fed Chairman Ben Bernanke was on TV today sounding a cautious note. "Recently, incoming information has suggested that the baseline outlook for real activity in 2008 has worsened and that the downside risks to growth have become more pronounced…I agree fiscal action could be helpful in principle,” said Bernanke.
Many economists, in and out of government, are much less optimistic than Bernanke and either forecast impending recession or say we are beginning one already. Nearly all are in agreement the economy is in need of a quick fix of cash, out in circulation, buying and selling things.
Many ideas are being floated such as rebates and, of course, tax cuts.
So far the type of tax cuts most favored by the Bush administration are income tax cuts which have primarily benefited the upper levels of income. Some studies indicate little of that money found its way directly into the economy.
There is a way to make a tax cut that will have a nearly instant impact and will also immediately work to bring down inflation.
The Federal and State governments could declare a gasoline tax holiday for an indefinite period. This would result in an immediate result, the first time someone fills their tank they would save a considerable amount, The average savings would be around 42.8 cents per gallon. That would add up, if you bought ten gallons that means $4.28 that stays in your pocket. (These price figures are from a website, http://www.gaspricewatch.com/usgastaxes.asp and are from 2005, updated figures would likely mean a higher savings.) This would require no new bureaucracy, no applications, no forms, no paper work and would keep your money right in your own pocket to do with it what you will.
If the gasoline tax vacation was continued for, say, six months or more it would likely have a huge, beneficial effect on inflation.
This is a simple, doable idea and one well worth considering.