Did I hear this right, or did Jon Stewart — while talking to PBS’ Gwen Ifill — reveal the best economic stimulus package concept thus far? Take a gander:
I’m sure someone really smart will list the 12 reasons why that simply giving the $2 trillion directly to consumers — but only if they use it to pay down their debt — would never work. But from where I sit, on this here mountain of credit card bills, I can’t find fault with his logic. After all, the banks would get their money and we the people, free of our towering debt, would head right back out and start spending — thereby doing precisely what the government wants us to do.
Once again, The Daily Show makes my life better.
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Why, they can’t do that, because poor, ordinary people can’t be trusted with money — only wealthy people can be trusted to do the right thing with money.
Because, you know, that has worked out so well for us so far.
I think its a great idea. But trying to administer (i.e. determining what each person gets (do we do it evenly or based on need or based on debt whether someone is working or not) and makin sure that consumers actually use it to pay off their debt)would be problematic. But credit card companies don’t want consumers to lower their credit debt – when people are late they get to charge fees, etc.
There is no need to trust the ordinary people with money, or even send them checks for that matter. The money that is already being given to banks should pay down the balances of the actual loans of ordinary people, so that they are still not on the hook despite the bailout. After all, if we can forgive lenders the mistake of making bad loans, why not also forgive borrowers the mistake of taking those loans.
I almost flipped out when he proposed this last night. And Ifill’s reaction was priceless — almost like, “Well that just makes TOO MUCH SENSE, Jon.” Seriously though, I don’t see why it couldn’t work. It’s just simple enough to actually be effective!
Jon Stewart = the love of my life.
I want to go to there.
I wonder if you could do it like you do with insurance. Checks would be made directly to the lien holder in the person’s name. That way it would go to the individual’s debt directly. I am sure, like you said, there is some reason it won’t work, but it seems like it should.
Yeah, I know administering this would be a b**ch…but it’d solve EVERYONE’s problems, wouldn’t it?
Why should people who have been financially responsible let you get off debt free? If people are mad that we are giving the guilty finance people money, then why would the solution be to give the guilty average people money? And no, I’m not rich.
I have a degree in economics from a somewhat prominent school (not that it matters, but it seems worth mentioning) and I think it would work pretty well. Smart infrastructure improvements would be higher on my list (smart electricity grid, green energy, mass transit), but I can’t think of a way that Stewart’s idea would have major problems as long as the Fed kept who had what debt 100% confidential, for obvious reasons.
One thing I would make sure of is that people’s credit ratings weren’t helped by it. That seems sort of sacrilegious as the son of a family in debt up the wazoo, but banks need a barometer of ability to and history of paying for things when making loans from here on out.
The only decision that would need to be made is whether the government wants to divvy it up as a % of a citizen’s total debt or some sort of amount per person to be applied to debt. And as someone astutely mentioned before, money used for this purpose can (and MUST) get to the creditors directly.
My wife dabbles in economics, so this is her take on Stewart’s plan: It won’t work because the money that would be given to us is “different” than the money given to the banks. The banks get money that does NOT go back into circulation. Its used to soak up treasuries to fund the national debt. $$$$ given to us Average Joes/Janes for paying off our debt sounds nice, but all that will do is double the amount of real money in circulation, and with all that extra money flying around chasing the same amount of goods and services, prices will skyrocket. If you’re prepared to pay $7 for a head of lettuce, this plan is great. But it essentially doesn’t solve anything. Folks, dont ask me to explain it further….my wife is the smart one in my family, so that capsule is the best I can do. Any thoughts from others more economically-inclined would, I’m sure, be appreciated.
I thought I was the only one who thought his idea made complete sense. But I don’t know money, so maybe his idea is completely assinine.
Because $2 trillion divided by 300 millions Americans is still only $6,666 a person. While nice, that’s not really a mortgage-ending game changer there, is it?
It’s not going to go to 300 million americans, it would go to pay those with credit debt and mortgages. I don’t think the octoplets in CA are getting any money.
Sorry Jon, I love you but no. So I don’t buy things I can’t afford and pay my bills every month, and as a reward for this behavior I get to pay off everyone else’s mountains of credit card debt? Why don’t I just pick some random person off the street and buy them a flat screen tv while I’m at it? You know, the one I haven’t bought myself b/c it’s just not in the budget right now?
That said, I do agree something needs to be done to help consumers directly – how about putting the money towards lowering those obscenely high credit card interest rates, so that people in debt can actually pay it off over time instead of it building every month.
I just love that those of us who are in debt but honestly, and have big payments (mortgage, schools etc) are A)paying for those who screwed up and B)aren’t having OUR debts taken care of. It seems it would have been better to cheat the system to begin with – at least that way you can get bailed out!
Just to clarify – we do remember he’s a comedian, right? (and yes, I am a big fan of the show). He’s said over and over not to let “The Daily Show” be your source of news. He is spot on, on a lot of things, though!
My boyfriend has consistently asked me why we chose to do the right thing (i.e. pay taxes, obey laws, pay bills, etc.)? I have always told him that it was because that it was good people do. Then you see how the Bank of America CEO redecorated his office to the tune of 1+million dollars and I can’t argue with him anymore. I’m with Jon Stewart. I want my piece of the bailout and I don’t want it to go to my bank.
This isn’t a new idea…
http://jmtrom.blogspot.com/2008/08/economics.html
jacrla, why should I get punished (by not receiving a money infusion) simply because I am responsible and do not have credit card debt and bought only a house I could afford, at mortgage terms I could afford? If the money only went to people with credit card debt, or those with mortgages that they could not afford (because lets face it, most of us have mortgages, the real issue is making payments) the government is rewarding irresponsible behavior. And that is a rear end chapper (and what proof is there that, once the credit cards are paid off folks dont rack up again)? I dont have an opinion on the plan one way or another, but it would need to go to all.
Bravo, Jason.
Ok, I’m not an economist and I’m horrible at math, but would this really be so difficult? We’ve received tax rebate checks in the past. So what if each adult files a tax return (even if they didn’t have enough income to pay taxes) and includes either a copy of their most recent credit card bill, mortgage statement, or student loan. Then apply a reasonable limit, so we don’t end up with $7.00 lettuce–how about 3K per person? Those without any debt get a tax credit or an individual IRA opened in their name. This would reward people who aren’t in debt and help people who are, and stimulate the economy, too.
What Stu said.
Under the current bailout plan, the government stands to make money by buying equity stakes in banks and buying toxic assets, both of which the govt will resell at some point, ideally for more than what they paid.
Paying off consumer debt doesn’t have the same potential payoff back to the government.
I like this theory, and I liked at the first 30 or so times I heard it on other programs.
I totally agree with Stu and Jason. Why should responsible citizens have to constantly pay off the debts of irresponsible citizens? Not fair and not right.
But, what does this have to do with ninjas?
Rewarding consumers who were irresponsible with their money is a horrible idea.
But rewarding corporations who were irresponsible with -theirs-, violated their fiduciary duty and defrauded innocent investors is far worse in my mind.
Fortunately, that’s a false dichotomy. We can structure a consumer -or- a bank bailout to ensure that the money has strings attached.
As someone who has debt that is in no way connected to credit cards, I think this is a good idea. I sit on a stack of supposedly good debt – school loans and a mortgage. I’m able to pay them off each month, but I give up a lot of consumer purchasing because of these debts.
What’s not fair and not right is responsible citizens paying the debts of irresponsible companies and investors. Also, just because someone has debt or is having difficulty paying a mortgage doesn’t make them irresponsible. Try paying your bills when you’ve been laid off for months and no one is hiring (and your responsible money cushion is exhausted).
Agree with Glenn. A large part of the problem is not the banks’ lending relationships with you and me but rather with corporations and especially with each other. I don’t think there’s enough trust amongst the banks right now to encourage increased lending. And I think that even if everyone were to suddenly deposit lots of money into banks and/or pay off debt, the banks would still be conservative. We need people to spend money, not save it or pay debt.