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Economic Stimulus (and Blog Roundup)

This article was written by in Economy. 12 comments.


President Bush is suggesting a $145 billion rebate to taxpayers in order to stimulate the economy and avoid economic recession in 2008. About $100 billion is reserved for individual tax payers and the rest is for businesses.

This could come to the masses in the form of a $800 tax rebate check for each individual or $1,600 per household. However, a tax rebate may not be the best way to get money into the hands of who will spend it (and stimulate the economy as intended). Many who have a lower income and an inability to save thanks to (for whatever reason) paycheck-to-paycheck living conditions do not pay taxes, and would receive no rebate. If the government wants to get money into the hands of people who will spend and stimulate the economy rather than save, then it should somehow include these individuals.

If I receive a rebate check, I won’t stimulate the economy. I’ll put it in the bank and use it towards my 2007 tax bill. I’m sure most readers of Consumerism Commentary will do the same or pay off debt. A smaller portion will use the funds to buy something they’ve been eying or go on vacation, but not many. Get the “economic stimulus” to those who will stimulate the economy.

Here are some articles from around the web.

Speaking of tax rebate checks, Mighty Bargain Hunter will save his check for later. Eloquently, “It’s like a bar offering one on the house at last call. Everyone’s happy for another 20 minutes, and then people get to stagger home and wake up the next morning, hung over, to face the stress and the weight of payments that remained in the background while they were forgetting about life for a while.”

Nickel wonders how much top tip a cab driver.. He received a cold shoulder the other day after tipping 20 percent, and he doesn’t know why. Was it the amount? I think 20% for a cab driver is more than fair, but I don’t travel by taxi often. There’s an interesting discussion in the comments; there are always strong opinions surrounding the art and necessity of tipping.

Wise Bread offers an interesting article about inflation. Rising prices is just a symptom of inflation, not the definition. Prices fluctuate due to forces other than inflation, as well. Philip argues that on the whole, standard of living is decreasing. “It’s always hard to tell the difference among these things at the time; it only becomes clear after the fact. Fortunately, you can keep yourself on the right track by making the most cautious choices. If prices go up, look for alternatives. When there are no alternatives, buy less.”

Single Ma is charting the course for her next career move. I’m contemplating some changes at the office as well, so perhaps there will be more news as that plays out in the next few weeks. Single Ma has selected four leadership and management courses to attend.

Published or updated January 22, 2008. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 12 comments… read them below or add one }

avatar Yana

Maybe you were a bit too straightforward there, Flexo ;) My husband and I were just talking about this, and laughing at the notion that giving us a rebate would stimulate the economy. I’m pretty happy about it, though, as our taxes are going to be higher than normal this year. I do think that those who will profit from the rebate are a smaller bunch than those who will think of it as free money to spend.

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avatar Single Ma

I’ll stimulate the economy alright. Saving will provide reserves so the big banks can loan money for consumers to spend and investing will provide capital so the big business can expand and create jobs. :-)

BTW, thanks for including me in the roundup.

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avatar Ryan

This is incorrect. Any individual who receives a paycheck and earned above $3,000 and below $75,000 in 2007 will received a check; even if they did not pay taxes. These people will almost certainly spend the money immediately.

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avatar Matt

Just curious if anyone has heard more details than me about the economic stimulus plan. I haven’t found any PDF files or anything in writing with the proposal as written verbatim. Mostly, I would like to know if I file my taxes say… today (before the finalization of the bill), will I still reap the benefits further down the road. Basically, will I get 2 seperate checks or will I be penalized for not waiting and receive only my normal rebate and not an additional one in early summer?

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avatar Martin

more then likely I am going to use the money to pay off some student loans but agree that it’s a stupid move to give the money to the middle class instead of the poor if you want to stimulate the economy.

of course if you are trying to get voters to like you or your party then it might be the smart move

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avatar Karen

The IRS and CNN is reporting this “Rebate” as a tax advance against our 2009 taxes. From the IRS site: “The Administration and Congress have announced an economic growth package that would provide advance payments to many Americans.” A rebate is a return on current taxes paid, but an advance means that NEXT year we will have our refunds lowered by this “Rebate” amount or will have to pay it. Anyone else heard anything on this…if so, the media needs to be shot for calling it a REBATE if it’s really an ADVANCE. And everyone needs to realize that NEXT year, you will be really messed up on your taxes…

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avatar Luke Landes ♦127,380 (Platinum)

Karen: Thanks for the update. At the time of writing, the proposed solution was not an advance, but now that the bill has passed the Congress, it is an advance. Bush still has to sign the bill into law.

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avatar Mary

So, if i received $3500 refund this year, should get around that next year for my husband and 2 kids filing, in a few months if all goes as proposed, i’ll receive $1800 for an advance, does that mean i’ll only receive $1700 next years refund?

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avatar Luke Landes ♦127,380 (Platinum)

Mary: No, you’ll receive your usual $3,500 next year (all other things being equal).

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avatar jim

I AM THINKING ALONG THE SAME LINES. IRS
SAYS THE REBATE WILL NOT BE TAXED AS INCOME, BUT IS THIS SO CALLED CREDIT GOING
TO BE ADDED ON TO OUR 2008 TAX LIABILITY ??
MANY SENIORS WILL BE SHOCKED IF IT IS.
MANY ARE FILING FED RETURNS EVEN IF NOT
REQUIRED.

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avatar jay ell

As of July 11 2008 we have not received a rebate. can’t even find out about it.
How many out there are on the “Schedule” to have already received the rebate and have heard nothing at all

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avatar Geoffrey Barber

Economic Stimulus Package Suggestion

Not too long ago the U.S. citizens had an economic stimulus package due to our struggling economy which consisted of the average payout of $600 to the payee. Now this was meant as a relief in the midst of unemployment rising, housing market slowing and consumer confidence dwindling and let’s not forget gas prices skyrocketing! What was not thought through was what was going to happen next month after I filled my gas tank and paid the electric bill, the cable bill, the water bill and oh yeah we still gotta eat! I didn’t even mention the car payment or the insurance. Wait there’s the mortgage or the rent that comes due without fail. So while consideration wasn’t given towards those coming due again and no room to breathe I have to ask why? Why is it when the patient is clearly going into cardiac arrest do you tease with a duracell battery? I have a suggestion for a stimulus package. $1,000,000 to every taxpayer due the same as the first. And with all seriousness let me tell you what this will do. Play time is over and we need to get real about what we’re gonna do about our current situation because as it’s been stated and we all understand is it’s gonna get worse before it gets better. We can avoid that if we anticipate and see the mistakes we’ve learned from the past, but most of all learn from them. This is a win-win situation for everyone and something that should be considered with a part of the bailout package that will go to the big companies and banks which failed. Regardless of whose fault any of this is, are we going to throw the man a lifesaver or quibble over how he got into that predicament? We’re drowning and watching those manning the lifeboat keep the lifejacket just inches from our fingertips while yelling at us about how it’s our fault!

Ok here it is, how we all benefit. Here’s where we are right now. The banks have failed and do not have the funds to lend to anyone. The homeowner has defaulted on their loans and cannot afford the payment to the banks. The jobs have left forcing people into lower paying jobs or unemployment. The gas prices rise causing retail to increase their prices. Costcutting or downsizing is forcing companies to layoff massive numbers of employees. Retail is drying up. The outlook is bleak and dim. A shock to this patient has to be dramatic and quick and something that will do the most good to get a strong pulse again. Stabilizing the patient afterwards comes next and that can be done over time, but let’s get the heart pumping again! An economic stimulus bailout investment of $1,000,000 to every taxpayer! With the current administration it can be taxed with the same benefits of those currently receiving tax breaks at their level of income. This would stimulate whatever the percentage of those currently paying taxes in this country so it would not be unfairly distributed. How individuals choose to use their package is solely up to them but here’s what it allows and draws just from this course of action.

Here’s where we could be before the end of the year. The homeowner now is able to either a) payoff the mortgage of the home in or approaching foreclosure or b) bring their mortgage current to avoid foreclosure. The same would apply to other outstanding debts the recipient had incurred such as car loans, college tuition loans, medical bills and replace retirement accounts that had been wiped out due to the handling of failed institutions. This would stabilize the housing market drastically, while also reinvigorating the housing market to greater proportions. New and existing home sales would increase dramatically with the surge of equality and opportunity across the board. New cars would be bought thereby reducing the need for the car companies to need a bailout. Tuition loans and tuitions paid for or loans brought current the level of default brought to levels of half or greater. Education enrollment increases with the ever increasing cost of private college tuitions. Innovation on all levels being pumped into the system. Small businesses opening, expanding, marketing, selling, hiring. Average person working, paying, buying, consuming and being able to have breathing room to take chances otherwise not-i.e. investing. Stock market would rise with the consumers consuming again but with the opportunities noticed by few as a bullish market would attract a huge number of potential investors. With growth in the housing market and the commercial market, the infrastructure is also maintained with the taxes generated. Larger businesses would benefit obviously from the consumption of goods causing them to see record numbers in sales.

The cost of this is many millions and billions of dollars less than the proposed plan of giving the failed institutions blank checks to continue to reward employees with lavish bonuses and trips while views their guilt free actions on their heavy box shaped television at 11 of course. This would roughly cost the U.S. Government $125 million. Much less than the 700 billion dollar bailout which will never make it’s way to the restaurant in dire need in Nebraska or Michigan which relies on the nearby plant employees who aren’t patronizing the business because their plant shut down. This country has done some atrocious things to every color and shade of people living under the colors of the flag in what has come to be this nation as we know it today. There have been pockets of a hint of good consciousness amonst humanity, but more so it would turn out to be but a slap in the face. Reparations for the Native Americans in the form of them living on reservations and given ownership to a handful of legal gambling establishments in designated locations. The horrid treatment of the Asians as the Union expanded west. And of course the inhumane treatment of the Blacks for hundreds of years only finally promising 40 acres and a mule but instead given hatred and exclusion. While reparations are indeed warranted for all of America’s atrocities this is not what this is considered here but more of a reboot. But let’s not restart Windows from safe mode to the existing Commodore 64 we’ve been working with, but let’s pump up the wattage and get do what we didn’t see as necessary or even possible for that matter. Let’s get a Terabyte! We’ve already achieved a deficit in the TRILLIONS! We are losing our concept of the value of a dollar so to start a clean plate calls, no begs for the assistance to be the best it can be and level the playing field for everyone who dares believe we are who we say we are. The best nation in the world and if we’re not able to achieve anything less then everything we’re doing to date means nothing. The military men and women who have bled, died, been maimed or held captive in the name of this country have fought with their hearts and spirits only to be taunted and teased to come back to a country that cares not for their actions despite who called upon them. They would have done all they’ve done not in defense of the country by invaders, would be conquerors or terrorists but in the name of democracy which would come to mean-destroy and tear down by any means necessary. It’s been said of this nation, we love to build someone up only to tear them down and enjoy in their fall from grace. Who knew we’d be talking about ourselves soon enough.

What’s most mind boggling to me is why is the so called experts and brilliantly educated minds let us get to this point, but moreso can’t see a way out of our situation. Just as we’ve come to expect from politicians who talk and fill many pages with words, but don’t say much of anything with any substance. These economic strategists sound much like them, filling a lot of air time with the media but rehashing the horrors before us 24 hours a day. Look how many areas of the economy I’ve mentioned here. If there is a no to this idea and suggestion then I can no longer believe in the sanity of this country I too have served in the military and pay taxes and consume and live. After my years on this earth I’ve developed a healthy dose of cynicism for our nation and the direction not only our country is headed but the degredation of humanity and compassion and taking care of your fellow man. There is not a religion around that says the opposite of taking care of yourselves, your family and your neighbor. We have no excuse other than our own pigheadedness. What I fear for the most is my 9 year old daughter and my soon to be born son-their future here in this country, in this world. My time is not over and I will not go quietly into the good night, but I know as the day is long I have common sense. Do we as a nation? A government?

Geoffrey Barber
Charlotte, NC
P.S. As I’m making my list of who to send this to, I’m watching Lou Dobbs who is talking to Paul Krugman a columnist for the New York Times and a Nobel Prize winning economist. He just said there’s nothing we can do about the housing bubble as Lou Dobbs phrased the question and his response was not much, we’re just looking for a way to minimize the damage. This from our best and brightest. Come on America we need to really wake up and get our head out of our own ass. We can do so much better than this. If an 18 year old in this day and time can start myyearbook.com and have it grow to be the third highest rated or visited social networking site on the net, then the part of me that roots for the Jets and the Knicks and Rocky and the good I know there is in people knows deep down we can do so much better than what we’re showing right now.

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