This morning, several news organizations announced that the White House and Congress have come to a tentative agreement on the economic stimulus plan. The main part of the plan is tax rebates for singles earning under $75,000 and couples earning under $150,000. Each person will receive at least $300, plus an additional $300 per child. There will probably be a cap in the range of $1200 per family. Some sources say the checks could be as high as $600 per individual, with the cap still at $1200. You would have to have earned a minimum of $3,000 in 2007 to qualify.
According to a report I saw on Good Morning America, the IRS says it could be May or June before the checks start going out. They haven’t said if they’ll need to do it in batches like they did with the rebate in 2001. If they do, that could mean I won’t have my check until July or August. That’s fine with me, but I don’t see how eight months down the road is “emergency stimulus.”
Personally, I also don’t see how this will truly stimulate the economy. This probably isn’t enough to save anyone from foreclosure. I plan to use the rebate for debt payments, as do most people I know. That means it’s not money flowing back into the system. Other families may choose to add it to their household budgets and spend it on food, fuel, energy, and other household costs. I doubt many people are going to buy big screen TVs or go on a shopping spree.
I’m leary of the whole idea of using consumer spending to save the economy. Isn’t consumer spending the very thing that dug us into this hole in the first place? If we truly want to fix the economy, we need to reduce consumer debt, reduce the national debt, and balance the budget. Stopgap measures are just political mumbo jumbo meant to make us feel good about our politicians.
This does still have to pass the House and Senate. It’s expected to easily pass the House, but the Senate may want to do some tinkering. It could be up a month before the final bill is passed.