Over the course of at least the last few months, the U.S. economy has been slowing down dramatically. A late February Reuters/Zogby poll indicated that a majority of Americans are expecting the economy to head into recession, defined as two sucessive quarters of negative GDP growth.
But, my fellow Americans, help is on the way, in the form of federal income tax rebate checks. However, how helpful these checks will be in jump-starting the economy remains to be seen.
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It seems like eons ago, but earlier this year, after intense negotiations with both the House and the Senate, Bush and congressional leaders were able to reach an agreement on a $168 million economic stimulus package. The package focuses on income tax rebates for individuals making up to $75,000 and couples topping out at $150,000. The rebates total up to $600 per person with an additional $300 per child.
Before the stimulus packaged was fully fleshed out, the obvious question was already being asked: Will it help?
Nobel prize-winning economist Joseph Stiglitz argues that the package will not be as effective because it doesn't target unemployment benefits. Stiglitz explains that, dollar for dollar, unemployment compensation is the best use of stimulus money, since the recipient has to use it immediately.
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In an interview with NPR, economist Bill Spriggs, professor and economics chair at Howard University indicates that the stimulus package may help in the short term. People who are struggling day-to-day will get a boost from the rebate checks. But, argues Spriggs, putting $150 billion into the economy may not address deeper problems like mounting job losses and he echoes Stiglitz in saying that extending unemployment benefits should have been included in the package.
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Thanks to the wonders of modern technology, stimulus checks will begin arriving in your bank account starting May 2nd. They will continue to be direct deposited or mailed out weekly, according to a schedule determined by the last two digits of the social security number.
My family and I are spending our rebate on vacation in Costa Rica this July. In the meantime, it will sit in our savings account, earning negligible interest. I can't imagine that helps our economy, but that's our plan. So my question is two-fold: Are you planning to spend or save and if you spending, will buying a foreign-made high-end electronics item get our economy going?