Like millions of other Americans, we received a check in the mail recently from the U. S. Treasury Department. It was our economic stimulus check, part of a planned effort by President Bush to jump start our economy. The thinking, of course, is that if millions of Americans spend $600 each, the economy will take a huge leap forward. Of course no thought of political advantage has gone into this plan - it was done purely to help all Americans.
I'm no economist, haven't even taken an economy class - WAIT, yes I did. Must have had a major influence on me. The teacher was from Kenya. That much I remember. But what was I saying? Oh, yes, I don't feel competent to argue the effectiveness of the stimulus payments except to say I think they're dwarfed by the daily sums of money we are literally blowing up in Iraq. In fact the cost of this package is about the same cost as one year of the Iraq war. Wars are supposed to be good for a country's economy, as long as they're fought on foreign soil. So why hasn't the Iraq war been good for this country's economy? - outside of certain corporations, that is.
But I have been fascinated by the various polls and surveys taken regarding what people are going to do with their stimulus check. Here's one at ItemLive.com. According to a survey by H & R Block of 1,001 taxpayers:
45% will use the rebate to pay bills;
21% will use the rebate to buy a necessity, such as groceries or car repairs;
18% will invest the money; and
16% will splurge on luxury items, jewelry, electronics or a vacation.
Now from what little I do know about economics and finance, if you use the money to pay bills, you now have the money you would have used to pay the bills. You haven't really disposed of the stimulus funds. Likewise, buying a necessity just postpones eventual use of the stimulus check. Only the investing which is a long-term postponement of spending the funds and "splurging" on items that wouldn't normally have been purchased are really valid answers to the question. That means that only a third of those surveyed had any idea what they were going to do with the money. Of those about half would invest and half would splurge. We're going to stash ours away in a savings account but we'll know it's there just waiting to be spent. Most likely scenario is that we'll "spend it" two or three times before we convince ourselves that we've actually spent the whole check.
How about you? Will you be saving or splurging?
A whole year of Iraq war expenses? That is a lot more than I had expected.
ReplyDeleteI took an economics class at ARC by a Kenyan man. He was awesome!
ReplyDeleteThe best commentary I have ever heard re:the stimulus checks came from Tom Sullivan (talk radio). He put on some patriotic music in the background and then gave a stirring speech (of course dripping with sarcasm) about how it is our American/Patriotic Duty to spend this money on some useless piece of junk that we don't need, won't use, and then will spend eternity in a landfill. It is for the good of America that you ignore that piling credit card debt that you have accrued or your mortgage payment. Etc.
It was the funniest thing I have ever heard in a long time! It was so ridiculous!
On that note, I am a patriot and will buy a useless piece of junk (but really using the majority of it to pay off our car loan-so sue me)
I heard that radio bit, too, or a very similar one. It was pretty funny, in a sad way.
ReplyDeleteWe're spending our stimulus (and then some) on sending our boys to stay with Grandma and Grandpa for 6 weeks this summer. Help the country, overwhelm my parents, all at once. Woohoo!
That's the second time I've seen this Shirley person. She seems nice enough. Random bloquaintance or someone you know from the real world?
ReplyDeleteAnyway, the original note seemed to assume that the bills, mortgage, etc. would in fact be paid without the stimulus. Some of them would be allowed to go into default, or otherwise put off in a way that could be more damaging to the economy than paying the bills.
Shirley's a good friend of ours, choir pianist who's probably played our piano more than I have, and has the cutest little girl.
ReplyDeleteI see your point on bills that wouldn't be paid without the stimulus but I have a hard time imagining anyone in a situation where $600 or $1,200 is going to make the difference in going broke. It might delay it one or two months and maybe that would be enough to benefit from an improved economy.
Pay the mortgage, but then again, we received a larger check.
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