Brandon

“If consumers save rather than spend the money, there will be no stimulus”
I disagree with this statement. I think it’s more of a delayed stimulus than anything if people save the money. Let’s say the same thing happens as in 2001, and 2/3 are spent, 1/3 is saved. So $100B is spent, and $50B is put into bank accounts. Most people make less than 1% on their money by sticking it into a standard savings account, but for those that are a little smarter and get 4-6% percent through CDs or High Yield accounts, lets estimate 2%.

So that’s $1B/year being generated from savings, but I wouldn’t expect that to compound because most people will start dipping into it within 2 years.

The more important thing here is that the banks will suddenly be flushed with new available cash. The extra cash will allow them to drop loan rates and write more short-term loans for things like home-equity loans (which are becoming a rarity in such a terrible housing market), car loans (large and small), small business loans, and new development loans.

I think this will have a more significant impact on the economy as a whole than the $100B that will largely be spent on goods which are largely unsustainable and lead to unproductive practices, most of which involve a lot more sitting around in front of a TV.

Carlin

Also a reminder, if you OWE money, you have to pay it with your extension. The extension only delays the filing of the return, not the payment of what you owe. And if you pay anything, make sure you include the amount when you actually file your return. Also, if you’re going to call someone out on their blog, at least have the courtesy to throw your name up there.

Ben

Most of the stories I’ve read about the past experiences with “stimulus” rebates show that most people either banked the money or used it to pay down debt. Obviously those are the smart things to do with it, but as the person said, then it isn’t doing anything to stimulate the economy.

I think it was a bad idea all around. Very little stimulus effect, lots more debt for the nation. Dumb.

Horrible, horrible luck having any economic downturn during an election year, when every politician in the country is going to fall all over themselves to APPEAR to be doing something about it. Bailouts, stimulus packages, etc. Most of which do more harm than good.

Kat

@nioco, teachers don’t need bonuses. They make what most of America makes, only they do it in 9 months instead of 12.

Will we have to pay taxes on the rebate checks we receieve?

Jeremy Freelove

No Kat, the government is considering this a refund of previously paid taxes.

Rory

I agree with the statements made about the “no stimulus” for savings. Unless the person saves their money by cashing the check and then sticking the money under their mattress, I don’t see how it wouldn’t provide stimulus in one form or another.

nicoco

Bonuses or not, that was not my point.
My point was: the government is redistributing money it collected, hoping that people will spend it and stimulate the economy.
Why couldn’t the government spend this money directly and stimulate the economy.
There are many ways the government could do that, depending on your political views. The examples I gave are just examples, it could, build new prisons, I’m sure every one of us has many ideas…
Why wouldn’t that stimulate the economy? You build a new prison, it’s a new contract for a building company, they hire new workers, … those workers buy ipods… etc.
I guess the difference is that this ’stimulus’ is much more short term, but I can’t help thinking it’s stupid and is done only for popularity.
Now, I prefer to have this money myself, I think I will spend it more wisely than the government (I won’t bomb anybody with that money, that’s for sure).

observer

nicoco, I think Bush in one of his speeches has replied your question regarding why they are giving the money to the people than spending it itself. He said that he believes American people know best about how to spend their own money.

Apart from that, I think if govt resorted to spending the money itself, it would set a bad precedent, and republican establishment would not want that. Also, there would be accusations of inefficiency and corruption and just a political fiasco on an election year. Giving money to people, however, would just make people happy.