The Economic Stimulus Package signed by the president in February is designed to promote consumer spending and offset the possibility of a recession. The goal is to jump start the economy by creating additional household funds through taxpayer rebates. Lawmakers hope these additional monies will be fed right back into the economy, with increased spending on domestic goods and services that many people have put off buying over the past few months.
Recently, many water cooler conversations have revolved around how those rebate checks will be spent. However, I've decided not to count my pennies before I receive my check in the mail. Sure, there are a few electronic gadgets that I've been drooling over, and even some things that I've passed over at one of the super home improvement centers. But with the proposed distribution of the rebates scheduled between late spring and early fall, I'm not quite sure what my most immediate needs may be at that time.
Under the proposed stimulus package, the government would pump $161 billion into the economy in the form of rebate checks which amount to about $600 per household, with an additional $300 for each child. In effect, this amounts to approximately $50 per month for my household. This equates approximately to a tank of gas, and I'm not so sure that excites me enough to start planning a trip to Disney World.
The senate actually considered a different version of this package which would increase the total cost to $193 billion, and include more households in the disbursement of those funds, although each household could have expected to receive less. Either way, if all the funds allocated to this package are not transferred into domestic spending, or if they are spent on products manufactured outside of the United States, American taxpayers will eventually shoulder the burden.
This is the second such rebate package initiated during the Bush administration, and frankly, I don't remember how the last one was spent. My guess is though, that many people may use those funds to pay off interest on credit cards or catch up on past due bills. I also feel that a great many people, me included, would hold onto a portion of those funds for a rainy day in the event that the encroaching recession isn't diverted.
This, of course, would create the opposite effect of governmental expectations. Holding onto those additional funds instead of spending them does not create an energized economy. Although I'm concerned about the direction of economic growth in our country, I'm more concerned about the economic stability of my own household. I do not foresee any significant changes to my income within the next twelve months, and though the additional funds would be welcomed, I'm not convinced that this economic shot-in-the arm would reduce the prices of the goods and services that are currently a staple to my home.
Personally, I believe there could be additional incentives which would make me more comfortable with spending, such as a freeze on price increases at the fuel pump, or higher taxes on products manufactured outside of the United States. I'm convinced that factory workers in this country would appreciate some surge in consumer spending on the products they produce. They would also feel more comfortable about having a job next year, and possibly even become more willing to spend a little more of that rebate check.