When the government announced that they were going to help stimulate the declining economy by issuing rebate checks, it came as a surprise to all. The governments was hoping that the recipients of these checks would run out and spend the money on a “big purchase” like a new TV, DVD player or any other item(s) that would put the money back into economy to help fend off a recession.
What Are They Thinking?
Did the government think about what would happen if the rebate checks went to pay down debt? How would paying off your credit card help prop up the economy? The check could not have come at a better time. Rising gas prices and daily living expenses have re-directed spending of the checks. Consumers are going to be careful on how the spend their new windfall of money. They are going to think twice before putting that money towards a new plasma tv, stereo system, or shopping spree. Having the money to help pay for the rising price of gas and food will be more important that the “big purchase”.
Recent government figures released show that consumer spending rose a mere 0.2 percent in April. This despite widespread national anticipation of the stimulus checks. Estimates show that about 131 million households will receive a total of $110 billion in stimulus checks by mid-July. The way people decide to spend them will determine that direction of the fledgling economy.
The last time the Federal government attempted to avoid a recession and economic decline by issuing stimulus checks was in the Summer/Fall of 2001. Most checks were about half the amount of the 2008 stimulus checks. The recession of 2001 last only 8 months and was over by the beginning of 2002.
The Breakdown
According to the Federal government, the stimulus rebate checks will vary in amounts. The amount you are eligible to receive will be determined from your 2007 tax filing. Below is the layout of how the amount of your checks will be determined.
Most individual taxpayers are getting checks of up to $600; couples will receive $1,200 plus an additional $300 for each eligible child under 17. People earning too little to pay taxes would have had to make at least $3, 000, this includes seniors whose only income is from Social Security. These individuals will get $300 if single or $600 if a couple. Surprisingly, the wealth is getting snubbed. The stimulus checks start to phase out for those individuals or couples that made over $75,000, or $150,000 for joint filers.
Most Americans can testify to the mental impact of receiving a large check. It can be confusing to understand since the government has a large deficit, yet wants to give the citizens money
Most economists are now saying that the US will be able to avoid a severe recession due in part from government and the stimulus checks.
Most economists now think the actions of the government and the passing of the Stimulus Act, we will be able to avoid a severe recession.
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