I’m glad everyone is excited about receiving checks from the government in June or July, but there seems to be a misunderstanding amongst people I talk to. While President Bush and a contingent of the legistlative branch have agreed on the propsed details, the bill still has to pass the House and the Senate. None of the details have been finalized, and no voting will take place until next week.
It’s possible Congress will pass the bill straight away, but I doubt it. The politicians will use this bill as an opportunity to propose other laws which would be added to the economic stimulus. One proposal that may be raised in the Senate is was the idea of offering the rebates for some through food stamps — a much quicker way to get “money” into the hands of the people who will directly stimulate the domestic economy.
In 2001, when $300 or $600 checks were sent out to taxpayers to stimulate the economy, a majority of the funds that wasn’t saved or directed towards debt was spent on clothing. When most clothing is manufactured overseas, spending of this type had little effect on the domestic economy.
By the time the checks arrived in 2001, the economy was already halfway towards recovery. That could happen again this year, particularly if checks are delayed until the end of tax filing season by the IRS.
Before you start planning what you’ll do with this money, wait for the bill to pass the Senate and for the President to sign it into law. Celebrating now is premature. Lessons from the 2001 Tax Rebates [NPR]
February 13 Update: The Senate and House of Representatives have both passed the compromise version of the stimulus bill. Read the complete stimulus bill here, and you’ll be a step ahead of many of the congressmen who didn’t have a chance to read it before voting.
Updated January 12, 2018 and originally published January 25, 2008.