It doesn’t take much for one to realize the economy of the United States is in trouble. Whether it’s the mortgage and home-foreclosure crisis, the increasing price of oil and fuel, the increasing cost of basic goods and services, stagnant wages, increasing unemployment, increasing credit card debts, the devaluing of the dollar or any other number of indicators, it’s clear that the economy is struggling.
Lawmakers in Washington, D.C., have come up with a bipartisan plan to address, at least in part, these issues. H.R. 5140, the Economic Stimulus Act of 2008, is designed to get cash into the hands of consumers quickly, as well as provide some tax breaks to businesses, as a means of creating an immediate artificial boost to the struggling economy. Amounting to about $150 billion, this stimulus package is designed to encourage a much-needed influx of consumer activity. The question is, will it work? And how exactly does it work?
President Bush, in a statement at the bill-signing ceremony on Feb. 13, said, “You know, I know a lot of Americans are concerned about our economic future. Our overall economy has grown for six straight years – but that growth has clearly slowed. And so in January I had an important phone call with the leaders of the Congress to talk about whether or not we could come together to provide a booster shot for our economy – a package that is robust, temporary and puts money back into the hands of American workers and businesses.”
He continued, “Congress passed a really good piece of legislation, and they did so in a very expeditious manner. The bill I’m signing today is large enough to have an impact – amounting to more than $152 billion this year, or about 1 percent of GDP. The bill provides temporary tax incentives for businesses to make investments in their companies so that we create new jobs this year. The bill provides individual tax relief in the form of tax rebates. These rebates will amount to as much as $600 for individuals and $1,200 for married couples, with additional rebates for families with children.”
Critics of the bill, including myself, question whether this will have a long-term impact on the economy and have expressed concern about where the money is coming from. To come up with more than $150 billion in direct cash payments to citizens when the country runs a budget deficit is a seemingly questionable approach in many people’s minds. In addition, it is not only taxpayers who will receive direct cash payments; many low-income individuals who do not pay income tax will receive a tax rebate as well.
According to the Internal Revenue Service’s Web site, payments will begin in May. “To receive a payment, taxpayers must have a valid Social Security number, $3,000 of income and file a 2007 federal tax return. IRS will take care of the rest. Eligible people will receive up to $600 ($1,200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17. Millions of retirees, disabled veterans and low-wage workers who usually are exempt from filing a tax return must do so this year in order to receive a stimulus payment,” according to the IRS Web site.
Now, the president and bipartisan members of Congress who supported this stimulus package want you to take the money and spend it. For this program to work the money must be spent – not saved or used to pay down bills. Spending it, and spending it all, is the only way to stimulate the economy – just as was done after those horrific days of 9/11.
Personally, it is my hope that the truck drivers in the United States will save the money for a “rainy day” or use it to pay down credit-card bills. There is little doubt that the price of fuel will continue to rise, that business expenses will continue to rise and that you will need that money at some point in the future. Why not take this “free” money and stabilize your personal economic situation instead of purchasing items that are not necessary in these difficult times?
