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Should U.S. offer tax rebates to offset oil costs?

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The U.S. government made the decision to offer tax rebates to help offset the economic slump. Based on recent unemployment figures, that may not be working.

Rising commodities and oil prices may be a more significant threat to consumers than the very modest growth in personal income.

That begs the issue of whether the U.S. is putting capital distributed to tax-payers in the right place. It may be that giving consumers subsidies to offset oil and gas prices is a much more effective way to keep the economy on track. And, that is what South Korea plans to do.

According to Bloomberg, the government in South Korea will put up about $10 billion "to help consumers and businesses cope with surging energy costs." These benefits will go mostly to those with modest incomes and small companies. Arguably, the rich and large corporations are better able to cope with high energy costs.

Estimates vary, but the U.S. economy is 10 to 15 times larger than South Korea's, so any similar program in the U.S. could cost $120 billion.

Not a ton of money to keep the skids greased.

Douglas A. McIntyre is an editor at 247wallst.com.

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Last updated: November 25, 2009: 05:30 PM

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