Stimulus Versus Tax Break

I want to simply discuss a stimulus versus a tax break. For me, I'll say a stimulus means that the government gives money to some group of people or concerns, and a tax break means that the government allows some group of people or concerns to retain more money by lowering their tax bill. From one perspective, these can be equivalent actions. I can either give someone $10, or let them keep $10. So, from my perspective, I can't judge a stimulus as against a tax break until I'm told whom or what they're to go to or what they're supposed to achieve. In and of themselves, being for one or another doesn't tell me much.

Take TARP, since it exemplifies the good and the bad. From my perspective, the $250 billion dollars just proposed is a credit stimulus plan. The government will give the money to banks, since they are generally in the market of loaning money. Of course, the government could do this itself, but, generally, the private sector which specializes in a certain business will do a better job than the government. So the government is given banks this money, and saying "loan away".

Now, given their recent record of loans, one might well wonder if, in this case, the banks are not reliable. One might also wonder what happens if they decide not to loan the money, but use it for other purposes. That might defeat the credit stimulus part of the money. And, indeed, these are real concerns. Is this a good stimulus? Frankly, I don't think so.

What is currently being discussed by a stimulus package involves the government distributing money. Could it simply give tax breaks and accomplish the same objective? Theoretically, yes. Right now, the reason a stimulus is being discussed is, from my perspective, it it easier to target and get spent than a tax break. However, as TARP shows, this isn't obvious.

Finally, a stimulus can be called for because the money to be spent is spent on things the government usually takes care of, so giving tax breaks won't work. Infrastructure is a good example.

I say this, because, without details, I'm having a hard time figuring out why people are for tax breaks or a stimulus. Of course, some people just automatically want tax breaks or more government spending, but I'm not one of them. I do, in the long run, favor a smaller and less intrusive government, but that does not equate with no government, and I have no problem in our taking our time and being careful.

In the end, we will have smaller government because it will make our people more prosperous and free, but it might take some time. Until then, as I say, I want to see the details of the plans and the rationale.