I recently wrote about the possibility of a second economic stimulus check, and whether or not it was a good idea. In my opinion, a second economic stimulus check is nothing but political posturing – a calculated move by Barrrack Obama’s campaign to solicit (read: buy) votes. But I love a good debate and I think the purpose of blogs is for everyone to have a voice.
A reader left a comment in favor of the Obama’s Emergency Economic Stimulus Plan, which calls for $50B to be given to individuals for relief from high energy costs, and another $50B split between the State Growth Fund and the Jobs and Growth Fund (a federal program). The latter two funds will use the $50B to pay for improvements to roads, bridges, and schools. Obama’s plan did not state where the money to pay for the State Growth Fund and the Jobs and Growth Fund would come from.
The $50B earmarked for individuals would equal $500 for single taxpayers, and $1000 for married couples or joint tax filers. It would be paid for over a 5 year period with “windfall taxes” on oil companies.
Would an extra $500-1000 help people? Surely. But I think there are better things that can be done with $50 billion dollars.
The reader comment is in the highlighted section below, and it is followed by my response (Here is the original comment). By no means is this meant to flame the commenter. This is strictly my opinion, and I welcome you to continue the discussion in the comments section.
As I sit here and read all of the folks that disagree with a second stimulus payment, I have but one question. Did any of you that dont seem to need that extra kickback, refuse the check, or donate it to charity? I know I benefited from it greatly. I dont live on public assistance, work my tail off to support 3 kids and the extra cash flow helped me pay some bills. Besides, if the United States can help other countries because thats our motto, why cant help each other? What ever happened to help our fellow man..some of you act like taxing a company thats already well beyond rich is such a bad thing. Why not have them give back to its own?
~ Dot
Hello Dot,
I commend you on your hard work raising your children. I have not been in your shoes, and I cannot pretend to understand what you sacrifice in order to give your children everything they need. That said, I don’t think a second stimulus check is a good idea for the economy. Yes, it would certainly help a lot of individuals, but on the whole, I think it would be detrimental to the long term health of our nation’s economy.
Refusing the stimulus check. I don’t think disagreeing with a first or second stimulus check has anything to do with refusing or donating the first stimulus check. I didn’t like the idea of the first stimulus check, but I accepted the money because at that point the government made a permanent change to the tax laws and it became my money. Just because I don’t agree with a change in a tax law doesn’t mean I should give away my money as a silent protest. That would accomplish nothing.
The emergency stimulus rebate is only designed for temporary assistance. Obama is proposing another permanent change to the tax laws in order to pay for what he calls a “4 month reprieve from high energy costs.” But if you read his stimulus plan you will see he plans to pay for a permanent change to the tax laws over a 5 year period. If it takes 5 years to pay for the first year of the permanent tax break, how will future years be paid for? More taxes will have to be raised to pay for this permanent change to the tax laws.
The problem with these permanent changes to the tax laws is that we are mortgaging our future to pay for a temporary solution. Sure, a couple hundred bucks would help most people, including my wife and I. But at what cost? This basically equates to using credit cards to pay for living the high life. Eventually the bill comes due and someone has to pay. That someone is you and me and our children and possibly their children.
What’s the big deal about levying a windfall tax on large oil companies? Because it taxes not only the oil company, but everyone who holds a share of that oil company, including people who hold shares of those companies in index funds, mutual funds, pension plans, retirement accounts, etc. This would include a lot of state, city, and government pension plans, as well as those belonging to millions of individuals.
On top of that, companies are in business for one reason: to make money. If the government forces additional taxes on oil companies, the oil companies will respond in kind by raising gas, diesel, and oil prices. It may be a few cents per gallon, but that eventually turns into a tax on everyone who drives or consumes anything that requires transportation to get from the point of production to the point of sale – including food, clothing, plastic and rubber goods, and other items.
I am also of the opinion that is it not for the US government to one day decide that a company makes too much money, so it should be redistributed to Americans. How can companies plan to run an effective business when the rules are subject to change at the will of a political party?
Note: The tax situation with the oil companies is extremely complex. There many tax credits, deductions, and other loopholes which allow the oil companies and other corporations to pay fewer taxes. I prefer to support tax reform to close these and other loopholes that affect many individuals and corporations before I would support taxing one or several corporations simply because a politician wants to make an example of them to garner attention and votes.
Can the US help its people and the economy at the same time? Yes, I think they can. But I don’t think handing out checks is the answer. The second part of Obama’s Emergency Economic Stimulus Plan calls for $50B to go to the State Growth Fund and the Jobs and Growth Fund. This would create jobs to repair roads, bridges, and schools, all of which need attention on both state and national levels. I believe creating jobs is a more permanent solution when compared to government handouts.
Unfortunately, I don’t have an answer for how to fund the proposed $50 billion bill. As mentioned earlier, I would much prefer closing corporate and personal tax loopholes and indiscriminately spreading the bill among many people and corporations instead of singling out a one set of companies and making them a political scapegoat.
In my opinion, a second stimulus check is nothing but a temporary solution to a larger problem.
Feel free to add your own comments – for, against, or indifferent.
{ 16 comments… read them below or add one }
When the governemtn issues “stimulus” checks, it sends a message that their financial future is based on consumption. Too many Americans already think that, which is why they are broke. Why doesn’t the government say instead: “We are going to tighten our belts and save money. You should as well.” In the short term that is bad but in the long term, its what we need to hear.
Tough Money Love,
I agree 100%. But America has a problem with perception, specifically being seen as losing. This applies to everything: business, sports, economics, war. Everything. No one wants to admit that times are tough, when actually admitting things are tough is just what we need to do. When America faces her problems, she can start working on a solution. Turning a blind eye toward the underlying issues and throwing money at the problem will not fix it.
I didn’t agree with the first economic stimulus check, either (even though it did help pay for my fence). I agree that focusing on jobs and infrastructure would help our economy more in the long. Additionally, a focus on creating new jobs in the field of renewable energy would also be more helpful in the long run, rather than throwing borrowed money at individuals. Our infrastructure is crumbling, and we need long-term solutions to our energy problems (anything that has us drilling more oil is only a short-term solution).
A windfall tax is not the answer. Ending subsidies for profitable companies would go a long way. Big Oil and Big Ag are especially helped by our current situation of socialized capitalism. They receive subsidies on top of being profitable companies.
I agree that we must face our problems. Unfortunately, we don’t like to hear that from our politicians. If we hear that America has problems, we immediately label the messenger as “un-American.” Until we as Americans recognize that we need to solve long-term problems, and change the way our economy runs, the politicians will continue coming with short-term solutions and telling us everything is fine.
I think people really aren’t seeing the forest through the trees.
Dear Dot,
Money has to come from somewhere. The government does not just magically make money appear…and when it tries to (ie printing more) it makes things go up in price. I accepted my stimulus check not because I agreed with it, but because I am going to have to pay it back, plus a ton of interest, in the future. See, anything the government “gives out” has to be paid back later on. Guess who gets to pay it? You and I.
@ Jesse – that’s not quite true. We might not have to pay it back. Our children will bear that burden.
So the real question is – will we take a stimulus check to pay bills, or would we rather see it invested in infrastructure, alt energy, education, health care, etc, so that our children won’t be burdened with the mistakes of their parents?
Id rather see it go to paying off some national debt.
Jesse, I agree.
deepali,
True, it will likely be our children paying it back, or very old versions of ourselves. Personally, I would rather see the money go toward renewable energy, improved infrastructure, and new jobs than government handouts.
People also seem to forget that no corporation pays any taxes. Any perceived taxes that you levy on a corporation will be passed on to consumers in the form of higher prices. If a company cannot generate the return on investment that it needs, it will close up shop!…and HOW many people are employed by oil companies?
Miranda,
I couldn’t have written it better. I’m especially in favor of sponsoring green energy campaigns and finding ways to reduce our reliance on oil. We have enough solar and wind energy capacity to fuel the majority of our country. We just lack the infrastructure to make it happen.
Like you, I would also rather look for long term solutions instead of short term, “feel good” measures.
I’m about to spend my first stimulus check in Vegas on labor day weekend. A second stimulus check would be awesome. Finally something I like about Obama and probably the only thing I ever will like about him. For the most part I ignore politics and economics, but extra cash in my hand is a good thing. It lets me make the decision about what to do with it whether it be to invest it in stocks, donate it to charity, or spend it in Vegas. The point is it helps ME and lets ME make the decision of where the money is spent.
Hi jrthekid,
Have a great time in Vegas! Spending money out there will stimulate the economy, and if you win at the casinos, even better.
As for a second economic stimulus check, it would certainly help people, but I will stand by my opinion that it is only a temporary fix.
Based on Obama’s plan outlined above, the math doesn’t make sense. Obama plans to make these tax cuts permanent, but his plan is to pay for the first year’s worth of permanent tax cuts over a 5 year period. If it takes 5 years to pay for the first year of tax cuts, how will future years be paid? He also doesn’t specify where the other $50B would come from that his plan calls to use to improve roads, schools, and bridges.
In this article, Reader Comment: We Need a Second Stimulus Check, I went on to discuss how additional taxes on oil companies will hurt everyone, including consumers at all levels (and not just of oil, but products containing petroleum, and items that require shipping). In addition, this would hurt anyone that holds stock in the oil companies – which is just about everyone in the US that own a mutual fund or 401(k) plan, including many state and government pension plans.
Yes, a second stimulus check would let you make the decision of where your money is spent, but it doesn’t let you make the decision of how, when, or how much you have to pay back, nor does it allow you to make a decision about how it would affect other people, their retirement funds, investments, etc.
I respect your opinion, but I think this plan is a short sided view by Obama’s campaign and is designed to get votes – not help people. $500 is not enough to sway my vote – especially when we may have to be paid back 10 fold.
Stimulus check? YES! $700 billion to bail out financial corp. WOW!!! $1 million to each tax-payer? About….$80 to$100 million….drop in the bucket!!!!
Do you mean we will be paying back on the paymeant,how about the frist check. please email me.
Thank you.
I’m doing my 2008 taxes and realized what the hell are we paying taxes for. The U.S. is a bank and in 2008 I got a bad loan, you got to read that page with the truth in lending statement.
LOL. Paul, that has got to be the funniest thing I’ve read in a long time. Thanks.
LOL. You all voted him into office and wanted “CHANGE”. You got your “CHANGE”. How do you like them apples? Oh yeah….What’s his motto? “YES WE CAN”! And he’s only been in office for 45 days! Just wait………