Stimulus Checks Not So Stimulant

General Zod · Post by **General Zod** » 2008-04-25 06:07pm

Majority of Americans say they plan to put their tax rebate checks in the bank or use it to pay off debt, according to a recent poll.

NEW YORK (CNNMoney.com) -- Tax rebates are the centerpiece of the government's plan to stimulate the economy, but many Americans are planning to put the money in the bank or use it to pay off debt, according to a survey released Monday.

A CNN/Opinion Research Corp. poll found that 41% of respondents plan to use their rebates to pay off bills, and 32% will put the money in savings. Just 21% of those polled intend to spend the money, while 3% said they will donate the extra money to charity.

The rebate checks are part of a $170 billion economic stimulus package passed by Congress last month that also includes tax rebates for small businesses, as well as payments to disabled veterans and some senior citizens.

The package will pay $600 to most individual taxpayers who earn less than $75,000, and $1,200 for married taxpayers filing joint returns who together earn less than $150,000. There is also a $300-per-child tax credit.

Overall, the rebates will put $120 billion in the hands of individuals, with the aim to get them spending in order to boost the faltering U.S. economy.
Follow the money

Jared Bernstein, an Economic Policy Institute senior economist, notes that taxpayers have in the past spent half to two-thirds of their rebate checks. However, he points out that the current economic conditions are unique.

"We've never done this in a period when American households are so deeply indebted," he said. "While [saving the rebate] is a valiant thing to do, what you want them to do is spend it."

Mark Zandi, chief economist at Moodys.com, thinks it is important to distinguish between what people say they plan to do, and what they actually end up doing.

Zandi thinks taxpayers will end up spending two-thirds of their rebate checks, which he estimates could add up to $70 billion flowing into the economy.

"I think that matters," he said. "If it's spent between May and Christmas it will add at least a percentage point to GDP by the end of the year."
Permanent tax cuts

Separately, the CNN/Opinion Research poll also found that 54% of respondents are in favor of making permanent the federal income tax cuts passed into law since George W. Bush became president.

The so-called Bush tax cuts, which are set to expire within the next few years, have become a contentious political issue. Some Democratic lawmakers have argued that the cuts favor higher-income taxpayers, while some Republican legislators say the cuts are important for economic growth.

So, during an economy where there's lots of people in debt, they're going to be using that money to pay off debts rather than spending it on luxuries. . .novel concept, I suppose. Hell, I plan on using at least half my stimulus check to pay off my dentist.

Kanastrous · Post by **Kanastrous** » 2008-04-25 06:09pm

I just heard some White House type talking about how rebate money used to pay down debt is a net positive, in that it "increases the liquidity in the system."

Any merit to the claim?

The Spartan · Post by **The Spartan** » 2008-04-25 06:09pm

The dumbshits (meaning the government) should have put that money towards infrastructure. Then we'd be building for the future, giving Americans jobs and then we'd really be stimulating the economy.

But instead we get half a reacharound that may pay off some debt or stimulate a foreign economy.

Fucking brilliant.

Patrick Degan · Post by **Patrick Degan** » 2008-04-25 07:33pm

Well, what did we really expect of anything coming out of the Maladministration? It's almost as if Chimpus Caesar went on TV and told the American people that they can now eat cake.

Sriad · Post by **Sriad** » 2008-04-25 07:57pm

Kanastrous wrote:I just heard some White House type talking about how rebate money used to pay down debt is a net positive, in that it "increases the liquidity in the system."

Any merit to the claim?

Absolutely. If investment megafirms are holding the bag for less credit, there'll be more new credit to go around.

It's less stimulusy than everyone going out and buying a dog and $300 of dog accessories, but it does exactly what the quote says. Investment firms don't sit on money (especially wimpy-ass US Dollars) and hope they'll go up in value: they invest it. If $50 billion in old bills are paid, the people those bills were owed to are going to either pay their OWN bills (return to beginning of this sentence) or they're going to invest in/buy crap.

I mean, thinking this is going to turn everything around it's like trying to stop a bullet train with a drunken vagrant, but it'll help as long as the money is used somehow.

Post by **Mr Bean** » 2008-04-25 08:16pm

Economic stimuluses is a joke. I prefer the "Bush Direct to Voters Don't hate me such much Bribe"

Even better the first checks will be mailed out this coming Monday and thanks to my great social security number I should be in the first wave of recipients.

Invictus ChiKen · Post by **Invictus ChiKen** » 2008-04-25 08:40pm

Meh I wont even get a check for reasons I'm not really sure of even though I did pay taxes this year.

Something about being unemployed... I could have used the money to...

Mayabird · Post by **Mayabird** » 2008-04-26 04:09pm

It didn't "work" in 2001 when they tried it. Most of the money went to bank accounts or to paying off small debts. Why did they think it would work now?

That's mostly a rhetorical question. I'm sure no actual thinking went into it.

The Duchess of Zeon · Post by **The Duchess of Zeon** » 2008-04-26 04:33pm

Mayabird wrote:It didn't "work" in 2001 when they tried it. Most of the money went to bank accounts or to paying off small debts. Why did they think it would work now?

That's mostly a rhetorical question. I'm sure no actual thinking went into it.

Economy bad! Give people money! Rar!

If politicians can form thoughts even that complex, I will be surprised.

Drooling Iguana · Post by **Drooling Iguana** » 2008-04-26 06:30pm

We have the bread, so where's the circus?

Post by **Darth Wong** » 2008-04-26 07:00pm

Kanastrous wrote:I just heard some White House type talking about how rebate money used to pay down debt is a net positive, in that it "increases the liquidity in the system."

Any merit to the claim?

Of course it increases liquidity in the system. Mind you, they could achieve exactly the same effect by increasing welfare payments, creating large public-works programs, etc. The difference is that all of those things are "socialist", and hence ideologically impure.

Really, "increase liquidity in the system" is just conservative-speak for "give people lots of government money", because conservatives can't bring themselves to say it. It sounds too socialist, so they have to dress it up as something else.

Fire Fly · Post by **Fire Fly** » 2008-04-26 07:03pm

Well, I can guarantee that when I get my check, I won't be going on a spending spree. Neither will my parents or my other siblings. We'll all be conserving it to make it last as long as possible. And it won't be going towards luxury items either. Politicians seriously think that a mere $300 or $600 will be life changing? It needs to be a larger sum of money if they want instant affect.

ArmorPierce · Post by **ArmorPierce** » 2008-04-26 08:11pm

Money will help me in paying for summer class... of course the state is cutting the education budget (after just cutting it last year) so tuition is going up (again) for next year.

Post by **Broomstick** » 2008-04-26 10:00pm

Drooling Iguana wrote:We have the bread, so where's the circus?

It's called "Congress"

Post by **The Yosemite Bear** » 2008-04-26 11:51pm

Patrick Degan wrote:Well, what did we really expect of anything coming out of the Maladministration? It's almost as if Chimpus Caesar went on TV and told the American people that they can now eat cake.

Well just goes to show that the majority of us are more realistic then American Nero, or Bear Market Stearns

Andrew_Fireborn · Post by **Andrew_Fireborn** » 2008-04-27 12:19pm

Broomstick wrote:
Drooling Iguana wrote:We have the bread, so where's the circus?
It's called "Congress"

I was actually going to point towards television... (Even the News networks are more flash than substance...)

Post by **The Yosemite Bear** » 2008-04-27 07:30pm

Andrew_Fireborn wrote:
Broomstick wrote:
Drooling Iguana wrote:We have the bread, so where's the circus?
It's called "Congress"
I was actually going to point towards television... (Even the News networks are more flash than substance...)

yeah, still waiting for fox to have human death matches of prison inmates as a new reality show....

Alferd Packer · Post by **Alferd Packer** » 2008-04-28 10:54am

I'm torn on this one. On the one hand, we're saving up quite a bit of money, because house prices are in free fall and and we have excellent credit, so we're going to easily be able to afford when we want to buy. I figure the money we're getting back would be put to excellent use in saving for a house. OTOH, when we do buy a house, we fully plan cut back on any and all extra expenses for a good while, so that we can rebuild an emergency fund for all those things that pop up when you own a home. In that regard, it might make sense to buy a couple of things now with the money, so that we're not wanting for them later.