So, if you haven’t heard, many of us in the US may have a “tax rebate” coming this summer. And if you hadn’t heard, it’s purpose is to put more money in the pockets of middle-class Americans, giving them the opportunity to buy things they want, therefore stimulating a sagging economy (trying to avoid a recession). I visit a sports forum and there is an off-topic section. One member posted a thread titled “Economic Stimulation or Wishful Thinking?” He asked what people would do with such a rebate, and most of us said that it would go to paying off bills (or helping lower the balances), put it into IRA’s or kids’ college funds, or just put it into savings accounts. So is it worth while for the government to further extend the deficit just to put extra money into citizens’ hands if they aren’t going to use it for what it is supposed to be for? Probably not.
I am no expert when it comes to finances like this, but I can think of better ways to explore this. Would it be better to give more tax breaks to companies, therefore giving them the opportunity to pay their employees more? That would pump more money into the economy. Again, not an expert here. There could be all kind of bad ramifications to that. But it seems to make more sense. Over a longer term, people are going to see more of a savings and probably apt to spend more money over time. If you just give everyone a huge chunk of change up front, they see it as an unexpected bonus, and won’t want to fritter it away on something they don’t absolutely need.
Another thing that comes to mind, what about those out there that REALLY need the money? I can think of countless charities that could use the money more then Marcia and I do. There are also so many people (especially children) out there without health insurance. Use the money to give them insurance. In theory they will have more money to spend on things they need, maybe even splurge on things they want, instead of cutting corners to pay for medical bills. Again, I am not an expert on these things. Just thoughts coming to mind.
To be totally honest though, even with what I think might be better options, I certainly will be thankful for any check we get this summer. Especially after having to put a down payment on a newer car recently. Marcia and I will probably dump most of it into our savings account to make up for that loss.
January 30th, 2008 at 12:44 pm
The whole economic system is based on expectations. “Wal-Mart sales were up a robust 3%, better than expected” is good. “Wal-Mart sales were up only 3%, less than expected” is bad. And the expectation basis is SPENDING MONEY. If you take your rebate check and put it into savings, not good. If you pay off your bills, not so hot. If you by a 50″ digital TV with speakers, THAT’S good for the economy, apparently.
The experts suggest that an increase in food stamps and unemployment payments will spur the economy, not in the House bill, might be in the Senate bill, but then they would need to hash it out.
And, while I haven’t read enough, I believe there is a stimulus package for businesses as well.