Originally posted by: ttown
Yes -- but you'll be relieved to know that Nancy Pelosi says that investing in food stamps is more effective in stimulating the economy than any tax breaks.
I ain't kidding.
She's probably right. If you care to contest it, be my guest.
You have to consider that most food products that Americans consume come from America, and even if it's non-essential stuff like snack foods and pricey name brand products it's still helping to support the American economy. It may be a lousy box of expensive breakfast bars or something, but if the money is there to be made then companies will not only spend the money to product an ample supply, they'll spend shit loads in advertising costs. If you want to get really deep in to the argument, then if people are spending less of their own money on groceries, they'll also have more money to spend on other consumer goods. The more the money branches out, the more effective it will be in stimulating the economy.
Giving people a huge tax break and giving them a big lump tax refund is more likely to make them pay off debt, put the money in the bank, or buy some big item they've convinced themselves they need... which usually ends up being foreign made goods sold for bottom dollar in the states to avoid losing profits when the technology is updated.
To summarize, the key to it all is that the money "invested" is more likely to stay in America, and more likely to be spread in many directions, rather than having the money go almost immediately out of the country or dead end in a savings account.
People gaming the system really have nothing to do with how food stamps can stimulate the economy. Americans tend to think that a smaller amount of money is not worth the effort to put in a savings account and are more likely to spend it if it is there. Thus, the investment in food stamps is more likely to stimulate the economy than a lump-sum tax break.