Could tax rebates be the answer?

Marketplace Staff Jan 22, 2008
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Could tax rebates be the answer?

Marketplace Staff Jan 22, 2008
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TEXT OF STORY

Scott Jagow: Now, what to do about the U.S. economy. The Senate Finance Committee opens a hearing on that this morning. Danielle Karson reports from Washington.


Danielle Karson: Everyone agrees that the economy needs a boost to avoid a recession.

Jason Furman with the Brookings Institution just knows what he’s going to say to the Senate Finance Committee:

Jason Furman: I am going to tell them that the best way to get the economy going again is to put money in the pockets of people who are most likely to spend it.

Furman says the best way to do that is to target the poor with tax rebates. They’re more likely to spend the extra cash and not bank it.

Congressional Office Budget Director Peter Orszag says the biggest bang for the buck would also come from tax breaks for businesses as well as rebates to individuals. But he says how quickly that money gets into people’s hands is a problem.

Peter Orszag: It’s unlikely that we’ll see rebate checks being mailed out before this summer.

But some analysts think a recession won’t necessarily happen, so rebates are a waste of money.

In Washington, I’m Danielle Karson for Marketplace.

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