How much?
at least $300 per person, $600 per couple for those earning at least $3,000 in 2007 with a bonus of $300 per child
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When?
checks likely to go out as early as late April, but most likely early May, taking 10 weeks to complete
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How?
The checks will be sent out automatically
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Who benefits most?
Families with children receive a bonus.
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What's next?
House and Senate to vote on measure next week.
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Tax rebates For Businesses
total of about $50 billion, including larger write-offs for capital expenses
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Easing mortgage caps
Raising limit at which Freddie Mac and Fannie Mae can buy mortgages from $417,000 to about $729,000
MOUNT VERNON — Thursday afternoon, Congressional leaders announced an agreement had been reached on an economic stimulus package that would put more money in the hands of consumers. The goal of the stimulus package is to encourage spending, in the hopes of staving off a recession.
On Jan. 16, Ohio Treasurer Richard Cordray announced he was proposing a state savings program that would give Ohioans a higher return compared to regular savings accounts. The goal of the program, SaveNow, is to promote financial responsibility and spark lifelong savings habits.
In a statement released by the treasurer’s office, Cordray said, “For the first time in history, Americans are spending more than they earn. Ohio families especially are under extreme financial pressure right now with no margin for bad judgment, economic circumstances or downright bad luck.”
So when those rebate checks come in the mail, should consumers spend, or save? Which one ultimately will help the country’s financial position?
According to William Melik, professor of economics at Kenyon College, the two are not necessarily mutually exclusive.
If consumers put the money in a savings account in a bank, he said, the bank will turn around and lend it out, thus keeping the money in circulation and stimulating economic activity. On the other hand, he said, if a bank just sits on the money and doesn’t lend it out, there will be no stimulus from saving.
“If banks are nervous and want to hold cash to increase their balance sheet, then you are not going to get the stimulus like with spending,” he said. “The broader point is, it’s not as if the money disappears. When you spend the check, it stimulates consumption. When you save the check, it stimulates investment.”
Either way, he said, it will take six months to a year for the effects to be fully felt.
According to the agreement announced Thursday, the goal is to send the stimulus package to Bush by Feb. 15 for his signature. Treasury Secretary Henry Paulson said the first rebate payments could begin going out in May, and most people could have them by July. He did note the IRS will already be overwhelmed processing 2007 tax returns.
Speaking on Nightly Business Report on Tuesday, Peter Orszag, head of the Congressional Budget Office, said it will take six months for the rebate checks to factor into the economy.
In announcing the agreement, Treasury Secretary Henry Paulson said the first rebate payments could begin going out in May, and most people could have them by July. He did note the IRS will already be overwhelmed processing 2007 tax returns.
The agreement calls for individuals who pay income taxes to get rebates of up to $600. Working couples would get $1,200 and those with children an additional $300 per child. Workers who make at least $3,000 but don’t pay taxes would get $300 rebates.
The fact that almost everyone will get a rebate check will be good news to Apple Valley resident Phillip Hoffman, who was concerned senior citizens might not get a rebate.
“I think it’s only fair that senior citizens — we pay taxes, too — should get something,” he said. “I don’t think it’s fair if we don’t get anything. We can still use the money, even if it’s $100.
“I think it will help,” he said, referring to the stimulus package. “I think the people are not going to throw it away needlessly, because they do need help.”
Hoffman said he would probably spend a rebate on taxes.
“I doubt if I’d get [a rebate] because I’m retired,” was the sentiment of Richard Rine of Schenck Creek Road. If he did get one, he said, he’d probably do fix something on the house or on his property.
“I don’t know what I’d do with it,” said Peggy Taylor of Fredericktown. “Knock on wood, we’re doing OK. ... I’d probably pay down a bill.”
If it comes six months from now, she said, she might put it away for Christmas.
“Or whatever’s urgent at the time,” she added.
West Lakeview Drive resident Cindy Lauer said she would probably use a rebate to pay some bills on the house, or put it toward getting her house fixed up to sell.
“I need a new shower,” the 60-year-old FT Precision production associate said on Thursday. “Today, I just had some plumbing done.”
Lauer said she doesn’t really use credit cards, just a gas card. If the rebate was larger, however, she said she might put it toward a new car.
“Fifteen hundred would be a a good down payment on a car,” she said.
The rebates will go to about 116 million families. Taxpayers received a $300 rebate in 2001 under a plan similar to the one proposed Thursday. According to the National Bureau of Economic Research, two-thirds of the money was spent within six months.