Tuesday, July 1, 2008

Stimulus, Schmimulus

Guest Post by NJG:

I just yesterday received a letter from the IRS. Guess what? They're going to send me money! Several hundred bucks. Yay! Well, after all, I did send them several thousand a few months ago.

Seriously, though, I'm not sure exactly what this "economic stimulus" check is supposed to accomplish. Don't get me wrong-- I can sure use the money; I'm not going to send the check back. But it seems to me that if the government wanted to stimulate the economy, they have to do a little better than a few hundred bucks. Heck, the amount most people get is about what they're spending in gas every month these days. Most folks aren't going to take their goverment check and go buy an iPod, or whatever. It seems to me that if you really want to stimulate the economy, you have to provide a really big stimulus. Let's look at the economy right now: gas prices are streaking toward the stratosphere, homes are sitting for years-- years!-- on the market, and others are being foreclosed, investment banking firms are going belly up while others are pink-slipping workers all over the street, and prices for food, travel, and God knows just about everything else are climbing steadily upward.

Most middle class people I know are pretty much treading water right now. Giving them a few hundred bucks is like pouring a teaspoon of water on a withered plant-- it's just not going to do anything appreciable.

I don't know what the answer is. Another interest rate cut? A tax holiday? Better and better paid minds than mine are (supposed to be, anyway) working on the issue. Me, I'm going to take my stimulus check (whenever it finally arrives) and pay my home heating oil bill.


abandoning eden said...

hmm, well $600 for me is like a month's worth of rent and utilities, so it is kinda a big deal...

I'm using my stimulus check to get genetically tested for a cancer gene outside of my health insurence, cause I don't want my health insurence to charge me higher premiums when it turns out I do have the gene! (which my dad has so I have a 50% chance of having). It costs exactly $600. Woo!

Ok maybe it's not those exact $600, maybe I'll actually use the $600 for my trip to Boston in a month, and use money earned from my job to pay for genetic testing.

WebGirl said...

The only thing that I find stupid about the economic stimulus package is the name. The name is stupid because the amount of the stimulus means different things to different people. Warren Buffet is not going to notice a $600 boon, but a middle-income family struggling to keep ahead of their debts will appreciate the momentary little breath of fresh air.

It's so funny how whether amounts are big or small are relative. $600 doesn't seem like a lot of money when it comes in the form of a freebie from the government, but imagine if you had to write a check to a charity for that amount...would you consider that a nice contribution?

You know what would be really amazing? If across the United States, every individual and family that received that $600 (or $1,200) would invest it in an IRA mutual fund. Watch the market rebound through the roof! Now that would be a true economic stimulus because it would help the economy in a tangible, visceral way, and it would help everyone get a little closer to being ready for retirement.


Nice Jewish Guy said...

Well, Buffett wouldn't be getting a stimulus check-- in fact, anyone over a certain income level doesn't get one; I know several people who aren't getting a check.

Again, I'm not complaining about the money. But after paying thousands in taxes this year which I can ill afford, I look at this money as more of a tax refund. Because essentially that's what it is, even though officially I am not due a refund.

My question is, what about next year? By all indications, the economy is only going to get worse, not better. Are we going to get stimulus checks again next year? (Depending on who wins the election, maybe.) Maybe better a tax credit? I wonder how much it actually cost to process all the checks and mail them and related notices.