"Tax Rebates" are Low-Cost Payday Loans
By Kevin
Folks. Those $300+ "tax rebate" checks Uncle Sam will be sending you. They're loans. Forced loans. Not rebates. Not refunds.
Loans.
Granted, they're loans that won't be paid back in full for a very long time. But either you will repay them with taxes, or somebody else will repay them in taxes, or we'll all repay them with inflation. And whoever holds the debt will be collecting the interest.
But more important than noting that the rebates are loans, is noting the size of the loan is VERY close to the size of the average payday loan, but with a far lower interest rate.
I don't know the best national data to check, but according to this 2005 Washington State report, the average Payday loan there in 2005 was $385, and the average fee was $48. Since the average length of a payday loan was 18 days, this comes out to an APR of about 500%. The Federal Government borrows at considerably lower rates of interest.
Needless to say, I doubt stimulus advocates want to tell you that they're using the Federal Government's long term paper to bring you a low-cost payday loan, but that's precisely what they are doing.
[Later]: I'd be curious to see if people who cash their checks at Wal-Mart spend a quarter of them there, like they did in 2001.
[Even Later:] I'm not sure if I want to read this article, as the headline...
... leads me to believe the authors won't be applying occam's razor or his diligence in using it. Why isn't it plainly obvious to everyone that politicians LOVE pretending to save the economy while giving money directly to voters?
[Update]: I read the article; boy am I sorry.
Bipartisan. Cooperation. Give me a break.
I'm sorry, he sounds just like my four-year-old -- who thinks he can fix anything with a set of plastic tools, when in reality he can break anything with them.
"Many Americans believe that Washington is broken," said House Minority Leader John A. Boehner (R-Ohio). "But I think this agreement, and I hope that this agreement, will show the American people that we can fix it."
Can they make it stick in a balky Senate? And can they extend this moment of cooperation, or is it a one-time deal in the face of economic and political desperation?Bipartisanship and cooperation are low-return, high-risk activities. There will be compromise, of course, but in an environment of self-aggrandizing and self-promoting competition. I should like reporters and editors to stop lying to me; they do not sincerely believe this will herald a new era, and neither does anyone else....
Bush plans in his State of the Union address Monday to outline several areas in which he hopes to work with Congress, including trade and veterans' health care. And some aides think they could find common ground on warrantless surveillance and children's health care. The economic deal showed what is possible. "This is the first example of it," said a senior administration official. "I don't think it will be the last."
[Final Update]: What he said.
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