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I don’t know about you guys, but I’m growing weary of the government’s NEW ideas to help stimulate the economy. Everything they’ve done thus far seems to be only mildly responsive, but it sure is costing us a fortune. It should come as no surprise then, that the government is mulling over another stimulus package. But, before you get all excited and think they’re giving you money, they’re not. This package would be structured quite a bit differently than the last one.

The trouble is, while everyone in Congress agrees that a new package is needed, they can’t seem to agree on what should be in the package. So here’s a breakdown of what each side wants.

Democrats

- Extend jobless benefits

Ok, this one I could see. If someone is laid off and actively looking for a job, but seriously struggling to find one, then having the extended benefits would be helpful. But, here’s the thing, I’m not big on social welfare programs that hand stuff out to people without just cause. I don’t want to pay for some lazy individual who wants to sit around and do nothing all day, but still get their freebies at the welfare office. That’s a waste of my taxpayer dollars. On the other hand, if a single mom is laid off and can’t seem to find another job, then I say extended benefits in her case would be appropriate. There needs to be some restrictions on these extended benefits.

- Increase food stamps

I’m not real big on this, for the reasons listed above. People take advantage of social welfare, I’ve seen them do it. Yes, it can help some, but increasing food stamps doesn’t seem to be a viable solution to the economy’s problems, in my opinion.

- Invest more money in infrastructure projects to create more jobs

I like this idea a lot. There are tons of projects in the wings, ready to go, that will open a bunch of new jobs. The only thing they require is the money to get going. The downside to this is that these jobs are in the near term. Once the project is completed, there’s no guarantee that there will still be jobs available. Although, it takes them an average of 3-5 years to get the roads and stuff done here. Maybe by that time the economy will be better anyway and more jobs will be available.

- Call a moratorium on foreclosures

I’m actually surprised more aren’t on board with this option. It seems to me that if the problem with the housing crisis is people defaulting on their loans, then cut the default part out. It sounds simpler then it is, I understand that; however, if greedy lenders were more willing to work with homeowners then homeowners would be more willing to continue paying the lenders. It’s not that hard to figure out. I know I wouldn’t want to continue to sink money into a house I knew they were going to take away from me - not when that money could be used to keep up on other bills. The other benefit to this is that there aren’t a ton of foreclosed homes on the market, lowering other property values.

- Making the bill passed last February permanent

This bill increased loan limits that could be backed by Fannie Mae, Freddie Mac, and FHA. In my mind, this is a waste of time. The problem with these loans isn’t how much is backed - though honestly, the lenders would fair well with this in place. The problem is that homeowners got into loans they couldn’t afford. So, this really seems like an unnecessary point to belabor.

Republicans

- Temporarily reducing or eliminating capital gains tax on stocks

I don’t get too much into the stock side of finance, but I imagine that such a move would have a direct impact on how people access their investments. I suspect there would be plenty of people willing to pull out in order to avoid the capital gains tax and reinvest in safer securities. Perhaps I’m wrong, but I’ve had at least three clients in the last few weeks mention they’d pull their stocks if not for the capital gains tax. So, I don’t really know if this would help jumpstart the economy like the Republicans think it will.

- Lower income tax rates for companies that buy distressed assets

Well, this would certainly help companies like Chase and Bank of America who have had to step in to keep banks and investment firms from falling. But, how does this really benefit the people? This one feels like it was thrown in to keep the lobbyists happy. The upside is that with the prospect of a tax break, perhaps the company won’t have to lay anyone off.

- 2nd homes entitled to capital gains exclusion

I do like this one quite a bit. I don’t know if it’s possible to separate the capital gains tax on stocks from that of selling a home because I’m not a tax advisor. While I don’t think reducing or eliminating the capital gains tax on stocks is the right move, I do think doing so in this case could be beneficial. The idea behind this is that purchasers of homes that are not their primary residence would be entitled the same capital gains exclusion as owners who sell their primary residence. This would encourage people to consider purchasing second and third properties for their own reasons, but it would take more foreclosed properties off the market, thereby increasing home values. The only downside to this suggestion is that it would only count on properties purchased within the next 18 months and held a minimum of five years.

Both Agree

- Suspending income tax on unemployment benefits

- Temporarily exempting seniors over 70 1/2 from having to make withdrawals from IRAs and 401(k)s

Bernanke is of the opinion that now is the time to introduce another stimulus package, though he believes policy makers should take care in deciding what goes into the package. Other aren’t completely sold on having a new stimulus package at all. In theory, the idea sounds great. But, in practice we’ve seen little results. One man’s stimulus is another man’s pork.

My own feeling on this is that we need a little of both. Dems want all cash injection while Republicans want all tax breaks, but I think one or the other is a mistake. I think having a little of each is the best course of action, and probably the best way to actually jump start the economy.

What do you think? Do we need another package after the $85 billion dumped into the financial industry? Do you trust the government to make the right decision in this case, i.e. what’s best for the economy and not what will help them get reelected? Or will it be business as usual in Washington?