With recent announcements of an early release of economic stimulus checks, I’ve been considering how to ‘spend’ mine. There were early rumors that these payments are only temporary (i.e., you have to give the money back next year), but I have not been able to find anything to that effect on the IRS website. In fact, their FAQ mentions that no income tax will be owed on these payments next year. In addition, for those who were not eligible for the full amount due to their 2007 tax return, there may be an additional payment made after the 2008 return is filed. So to teh best of my knowledge, this is free money.
And I should spend it, right? The whole idea is to stimulate economic growth, to give a little boost to the general stream of the economy. Like Dolly Levi says, “Money, pardon the expression, is like manure. It’s not worth a thing unless it’s spread around, encouraging young things to grow.” And I do believe that. But getting an economic stimulus check is kinda like winning the lottery. Ok, it’s a pretty small amount to win, but if you just spend it, are you realizing its value? Shouldn’t you be investing that little nugget o’ cash alongside other nuggets, so they can be fruitful and multiply? And doesn’t that investment also boost the economy, probably right where it need the influx of cash most – in the financial industry?
Finally, is this whole economic stimulus plan really well-considered? Geoff Colvin thinks it’s a case of too little, too late. The economy will keep sinking, rather than waiting for the federal government to play catch-up. He also comments that all this tax talk doesn’t address another issue underlying our current economic pressures – the lack of Robin Hood. The richer are getting richer; the poor, poorer, and there’s no one with a bow around to redistribute the wealth. How do we deal with that? A little economic boost to a certain sector of the economy isn’t really going to help. Others consider the financial crisis to be far from over. Are little federal boosts like this really helping, or just delaying the final bottoming-out of markets that has to occur before we can start working our way up again?