I think you meant '...because the underlying economy is healthy...'

"...the Bush administration’s ideological rigidity..."

He really doesn't know what he's talking about.

unhealthy LOL....Recesion???? All of this is just a short term fix. And truth be told, it has been happening over past 3 decades. Reagan and Clinton have just as much blame as the current administration. just another reason i feel sorry for who ever the next president is por mr or mrs next president

The sky is falling, the sky is falling!

rawdawg, there are always plenty of problems for any new president, but we're in a lot better shape than in 1980. You're complaining about Reagan, Clinton and Bush, but look where the country was before they came along. You don't actually buy in to all that Bush hatred masquerading as analysis in your blog comments do you?

Just dropping in to say that the words "rebate" and "transfers money back to tax payers" aren't accurate descriptions of what's going on.

In the 2001 stimulus package, Bush temporarily lowered the tax rate on the lowest tax bracket and changed the withholding formula so that we all got about $50 more per paycheck. But, since the stimulus package was passed in June, they back-dated the tax cut to January. The "rebate" represented the amount that you (hypothetically) overwithheld during the first five months of the year. So the rebate wasn't really what we think of as a tax rebate; it was really a cash advance on a future tax return.

Here's the difference: In 2001, I was married filing jointly but my wife was home with the kids, so we were single income. That meant that based on the tax cut, I overwithheld by about $500 (5 months, 10 paychecks, $50 per paycheck). But, they sent me a "rebate" for $600. Guess what happend in April of 2002 when I figured out my 2001 taxes? That's right, I had to _pay back_ about $100 of the "rebate."

I don't care what you call it, but it ain't a rebate if you have to pay it back. It ain't "transfering money back to tax payers" if the taxpayers have to pay it back six months later. They're just playing games with you, if that's what they're doing.

In this year's proposal, they are apparently raising the child tax credit by $300. But be careful--those of us who are near to the alternative minimum might well be pushed over the edge by the extra credit, in which case you can't take the credit, in which case you'll have to pay back this "rebate." The same thing is probably true about the $600 per taxpayer, although I have found absolutely no information in the media (thanks for the good work, journalists) describing where this money is coming from. But, if this is the same weird withholding shenanigans as 2001, then everyone, but especially those who are married filing jointly with one income, should be careful. You might well have to pay some or much of this "rebate" back in April 2009. Some rebate.

"Give such people a few hundred extra dollars, and they’ll just put it in the bank."

I presume Krugman knows that banks call deposits "capital," which those banks could surely use.

hjorg,
The government can't give you something they don't have. So unless the government is in a surplus situation, any rebate today is just a loan on money to be collected later. The Rebate Fairy doesn't exist.

I don't know if I like the rebate idea at all, but at worst it will do little to nothing, and at best it will stimulate the economy by some small amount. I can't see getting excited either way. If consumer confidence means anything, a lot of my coworkers seem to be pretty excited about it.

Dude, "free" money! Who wouldn't be excited?

I can only hope this lower taxes AND rebate check thing happens every year.

Hjorg could use a better accountant.

Bush is the genius who pre-empted Mrs. Clinton and had a little give-away neither Pelosi, nor Reid, nor Kennedy, nor even Obama could speak against. The cost is negligible and the PR value enormous.

In the years to come, historians will marvel at this man.

Yeah, the rich put their money in the bank, and the bank locks it up in its basement.

Thank goodness for bank basements! I was afraid they were going to loan my money to some shifty guy looking to buy an overvalued house or or a car that will only decrease in value.

Is 'basement' a synonym for 'lockbox'?

One reason the media is so quick to toss out the word "recession" (other than because there is a Republican in the White House) is that they have been waiting for probably 5 years to laugh at the rest of America when the slightest downtick occurs. The media 'business' (newspapers mostly) has been in economic free fall for years, and finally those *&^$#@%$#s in flyover country are going to get theirs!!!

But, Krugman is lost, the media is lost, and the economy is sound. Why are so many very intelligent foreigners willing to buy into US financial companies? Surely the Arabs could buy a Japanese bank if they thought it was firmer than Citigroup? Or they could buy the Bank of China. But they don't.

Citi will probably close this year at around $40. Merrill will do better, and BofA even better. The mortgage industry will suffer for a while longer, and it will have to get by with a lot less labor than 18 months ago (just like the airlines are doing today).

But manufacturing is OK, and might even improve. The Euros can only hope for stagnation - real growth is a fantasy (has Alitalia even sold yet? - I don't think so).

I don't know bout ya'll, but I'm taking all my capital and putting it in gold. Which I'm sewing into my mattress. No telling what those bankers will do with it if I let them get their hands on it.

Ack, who put that fluoride in my drinking water.

A comment on that Rectification of Names business:

Just as Mr. & Mrs BJ both could be video-taped and exhibited to a trial pratice class as exenplars of lying witnesses, so the above Krugman column could stand as a sample of devious, deceptive writing.

Almost every concept is maniplated and distorted, and there is no need to go over them again. Not only does the writer simple misstate the stimulus plan, he transforms the broad middle class from the Democrat stand-by of being one paycheck away from starvation to the "affluent" who won't spend the money.

patrick, i dont hate Bush. I hate reality TV. But I was only saying its enuf blame to go around. mean I remember then, Im a baby, im just 45 and got in on the market when it was at 3500

rawdawg,
I meant the reader comments on your blog not your comments here. I hit your link and checked out a few posts. You're about the same age as me so I understand it can be easy to look at the last 27 years as the only history that matters, but America is a much better place now than it was then and the Presidents/Congress/Supreme Court from '60 through '80 are the ones that created much of the mess that still exists. The last 28 years have been a great improvement. Actually, your views don't seem much different than those of the rest of the libertarians that blog.