Craig Daily Press / Cash flood

Economic stimulus payments not seen as a long-term economic bonus

April 12, 2008

Starting in May, the U.S. Treasury will begin mailing economic stimulus payments.

What that means differs from person to person.

Linda Redmon, 51, and Andrea Edwards, 31, both said they probably would use their economic stimulus payments to pay bills.

“It’s worth saving,” Edwards said, “but I know it’s going to go for paying something off.”

Orval and Linda Taylor, a senior working couple, said their economic stimulus payments wouldn’t have any effect on the way they budgeted.

“It’s just extra money to save or go on a splurge maybe,” Linda said.

Jessica Ketchum, 26, came in between on her stimulus payment plans.

“Since I’ll be able to pay off my bills with my tax return,” she said, “I’ll be able to spend that money.

“I’m not a saver.”

A $5.2 million push?

Economic stimulus payments will go to everyone with a valid social security number who had at least $3,000 in income and filed a 2007 tax return.

Payments are equal to what a person had withheld from their income for income tax, up to $600 for single residents and $1,200 for joint tax-filers.

Social security income and some veterans’ benefits qualify for income, as well. However, those exempt from filing taxes for those payments must have filed a 2007 tax return to receive their stimulus payment.

A rough calculation of stimulus payments coming to Moffat County — factoring in zero payments for the unemployed and additional payments for minors — could mean $5.2 million stuffing local pocket books.

The end result is likely to be more, since some unemployed earned income in 2007, and many residents will collect the full $600 payment.

Economy impacts

All that money may not make a big impact on the county, however, said Cliff Reder, Mountain West Insurance and Financial Services sales manager.

The idea is to get people spending money on goods and services, Reder said.

However, as some residents said, Reder believes most will use the extra money to pay off debt.

“Because the amount is relatively small,” he said, “I think most people have credit card debt, or some kind of other debt, and will use that to pay that off.

“I don’t know if people are going to spend money on things they might not normally buy.”

Because people will be paying off debt on things they already bought, Reder said, the effect of the stimulus payments will not stimulate growth.

“I think it’s a good gesture, giving money to try and enhance or stimulate the economy,” he said. “If people didn’t have debt, it might do what the government wants it to do.”

A short burst

Mike Toczek, Moffat County National Bank vice president, also said the stimulus program probably won’t make any long-term difference in the economy.

The federal government has lowered interest rates to promote spending on big items, such as housing and cars, he said. Stimulus payments likely will wind up in people’s grocery budgets, making those payments a one-time spending burst.

“It’ll be a very short-term burst,” Toczek said. “The amount of money people get will be gone in a week.”

Toczek said he did not think people would put much of it into savings.

“Are gas prices higher? Are food costs higher? Are utility costs higher?” he said. “It’ll free up some income for people to spend.”

Stimulus payments were designed to get product inventories moving, Tozcek said, which in turn would encourage companies to hire more workers, which in turn would bring more income tax back to the federal government.

The U.S. will need that extra tax revenue if it wants to start paying off its $51 trillion debt, Toczek said.

In Moffat County offices, officials didn’t factor in the stimulus program when they budgeted for sales tax increases, county Budget Analyst Tinneal Gerber said.

They did raise their annual increase in sales tax revenue, from 3 percent to 5 percent, she added. However, that mostly was due to the trend in the past couple of years when the county saw a 10 percent jump in revenue from year to year.

As for Gerber, she said she and her husband plan to invest their payments into their house.

“We’re doing some remodels,” Gerber said. “With the housing market like it is, we figure we need to put it into our house.”

Comments

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12 April 2008 at 4:44 a.m.

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taxslave (Anonymous) says…

I hope everyone realizes this money called “stimulus” is being borrowed from foreign countries to be paid back by our grandchildren and great grandchildren. Talk about taxation without representation. It is crimnal what the government is doing. Government has no money….they only have what they take from the taxpayer.

I encourage everyone not to spend this money. Rather, invest it in gold and/or silver coins and put it away and forget about it. The banker will come calling for it eventually.

The AMT patch is only for one year. The year after the average tax bill will go UP over two thousand a household.

12 April 2008 at 9:08 a.m.

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jmemcse (Anonymous) says…

If we spend that money at Wal-Mart, the money will go to China. If we spend it on gasoline it will go to the Arabs, if we purchase a computer it will go to India, if we purchase fruit and vegetables it will go to Mexico, Honduras, and Guatemala, if we purchase a good car it will go to Japan, if we purchase useless crap it will go to Taiwan and none of it will help the American economy.

The only way to keep that money here at home is to buy whiskey and beer, since these are the only products still produced in the US .

13 April 2008 at 5:49 a.m.

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taxslave (Anonymous) says…

Boost the American economy, spend it at a yardsale or thrift store.

13 April 2008 at 5:56 p.m.

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grannyrett (Anonymous) says…

Good gosh taxslave! Gloom and doom! Is that all you see? Is there anything in this city, county, state, country, or world that you won't gripe about? You, apparently are someone who always sees the glass as half empty. Some of us think the glass is half full. We prefer to look at the good things that are happening around us. If I had your outlook on life, I'd find a rock and climb under it. Probably a car would run over it and squash me dead! LOL!

13 April 2008 at 7:10 p.m.

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Globe (Anonymous) says…

Grany - Taxslave is a bit of a gloom and doomer. In most cases they only comment on things that are going bad in the economy. Sadly though Taxslave is right in many of his points. Things around the country are going from bad to worse. Giving everyone a couple hundred bucks is not going to do anything for our economy. China is buying up our bonds to pay for this rebate from Bush. So in essence they are loaning us money so that we can give it right back to them. That is pretty smart of the Chinese in my oppion. Easily 90% of this money is going to go toward a piece of crap chinese made product that will bust in a week or two. Few people are going to get their check and use it to go out and buy a new house/car/washer/range/ etc…… Most will buy a new TV or other electronic gizmo or pay off some debt, neither of which will do anything to help our economy beyone a very marginal amount. I agree with the idea of keeping the money as local as possible. Use it on your power bill, use it on landscaping or home improvments. Or better yet – Save it for a rainy day.