| Thursday, February 21, 2008 5:30 PM CST |
U of I expert: Stimulus an economic simulation
By Kartikay Mehrotra
kartikay.mehrotra@lee.net
SPRINGFIELD -- A University of Illinois economist figures, even if every dollar of the governor's proposed $900 million economic stimulus is spent in Illinois, it won't do much to jump-start the state's $528 billion economy.
During his annual budget address Wednesday, Gov. Rod Blagojevich pitched a plan to help families by doling out $300 per child to families with at least one of Illinois' three million eligible children.
Jeffrey Brown, a professor of finance at the U of I's Champaign-Urbana campus, says $300 per kid for families earning between $3,000 and $75,000 a year ''will barely register as a blip,'' if the plan is ultimately approved as part of the new state budget.
The governor says his proposal – modeled after a federal economic stimulus plan – will help struggling families take care of their bare necessities.
''This doubles the tax credit Washington just passed,'' Blagojevich told lawmakers Wednesday. ''Doubling the tax credit would give parents a little more money to pay for things their kids need now, and maybe have a little left over to invest in their kids' future.''
The extra money may give families a little boost in their checking accounts this year, but Brown says handing over money is far from the tax system overhaul Illinois needs.
"Throwing cash into the economy is not the type of reform economists are looking for," he said, adding that if residents receive and spend their money once Illinois' economy is back on the upswing, it could cause further inflation on the price of goods. "I would find it hard to believe that this will be the make or break difference between whether the State of Illinois flies into recession or not."
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