A question on the stimulus package

The stimulus package is (round numbers) $850 billion or so. In 2008, 136,941,000 people filed tax returns, according to H&R Block. Why, then, did the government not just send a check to each person filing a tax return for (round numbers) $6000? To my way of thinking, that would spark the hell out of the economy.

The best way to break a recession is to get the public back buying goods and services. You put 6000 clams in my hand today and I’m sure I’ll be like the majority of folks: I’ll pay some bills, I’ll put some in the bank, and I’ll go spend the rest. We’ve got repairs on the house that need to be done, I’d like something more than TV dinners, etc., etc.

Missed the edit, grumble.

My questions: what would you do with yours if the government decided to “prime the pump” by sending out $6000 checks? And why do you think they didn’t do that?

Seems like a good idea to me that’s way to simple and common sense to ever happen. :wink:

I’d think the $6,000 would be extremely helpful to people in credit or mortgage trouble.

I would put it towards getting our house ready to put on the market, and moving costs and fixing up our next house. So it would all get spent within the next year.

It will never happen though.

I’d pay off my car, buy either a new computer or a widescreen tv and put the rest in the bank as an emergency cushion.

I’m not sure if you’re looking for a debate but doing that means

  1. No money towards job creation
  2. No money towards infrastructure improvements
  3. No money towards solving health care issues.
  4. No money towards alternative energy research

I’ll just shorten the list down to this: Doing something like that will help Visa, Wal-Mart, and your local McDonald’s. It would take years before any of that “trickled down” to the organizations who are essential to this economy but don’t get their revenue from consumer spending and debt consolidation.

Besides, many of those 136,941,000 people filing tax returns did so after paying less than $6,000 in taxes. So you’re advocating people getting directly in the form of a check from the government more money back than they put in. You? I can’t believe you would support such a thing.

I would pay off some debt I have. I sure as hell wouldn’t be buying anything.

I think a lot more would benefit than those. Like banks, who may not get stuck with defaulted mortgages or others loans. They would have more cash when people paid on their balances and may be of a mind to lend some of it.

I, personally, would stimulate the heck out the economy. I would pay off my car loan, buy some PA equipment and take some friends to dinner.

In addition to what Enderw24 said, I would also add:

  1. short-term, price distorting inflation as new money enters the economy; like wages, some prices are “sticky” and will take some time to come down

  2. lots of people, like myself, will either save it, or put it on hookers and blow. Saving it is not preferred because it will either a) cause more inflation like in #1(banks creation of money/lending based on deposits); or b) (b really only exists because of the poor current status of the economy) banks don’t lend any money and use it to shore up their financial reserves, thus ending the stimulus.

ETA: oh, I definitely would save half of it, and put the rest towards a vegas vacation of which that no good will come of.

It would be good for the hookers and blow industries.

Buying stuff at Wallyworld would stimulate the economy really well. I’m referring to the Chinese economy , of course. I guess that’s what the OP wants.

If you want the Chinese to keep buying up US bonds to displace floating their Yuan, then this is desireable. Unfortunately, it does not solve the way the US handles it finances. The US cannot afford to keep exporting its inflation, because eventually the US won’t produce anything and the entire system will collapse, worse than what’s going on now.

The $1200 stimulus check last year was a smaller version of this, and I think people didn’t spend as much of it as expected. I think the spending habits of people are more defined by confidence in their future prospects, rather than an immediate cash injection. If you are worried about your job prospects in a lousy economy, I think you would be a lot more frugal than if you are confident in a good economy, even if you are handed $6000.

I think this happened last time we did this, and I think it would happen again. Personally, I would just stick the $6000 in the bank, but I would probably do that in a good year too :slight_smile:

It would not be a stimulus ,more like an orgasm. Job creation has benefits down the line. A spending frenzy is a burst followed by depression.

If the government borrowed money to cut me a $6000 check, I would probably just save it in some form or another. I couldn’t see spending it because:

  1. My job is not necessarily all that secure (whose is, really?)
  2. Prices of big ticket items are falling so even if I wanted to buy something, I’m better off buying it more cheaply later
    2a. I don’t have any purchases of that size that I couldn’t afford to delay
  3. My savings rate is a little too low
  4. I’d have to pay it back in the form of higher taxes down the line anyway

Savings rates have been on the rise and I would expect a $6000 check to provide a decent one-time boost in savings but less in the way of actual economic stimulus.

If folks are out there buying with their stimulus checks, there will be increased demand for goods and services. Jobs will be created to supply that demand.

That $6000 figure is (rounded) what the government is planning on spending, per capita, now. My question is why the government won’t put the money directly where it will do the most good - in the hands of the taxpayers.

But much of the money will be saved rather than spent. And of the money that is spent, much of it would be on imported goods. Sounds rather inefficient to me, when the government could instead spend it all on American goods and services.

If it’s saved, fine. The banks now have more reserves to loan, interest rates come down, credit loosens up, etc. It’s all good.

And if the money is spent buying imported goods, at least it’s being spent here. If you go to Wal-mart or Fred’s Novelty’s and buy a Chinese-manufactured widget, then that store is making the profit on the sale.

It’s nice to see that so many dopers agree that this would be a better idea. The reason they won’t do it is that the government wants to protect their own jobs and increase their own power base. Worst of all from their point of view, what would happen when it works? Taxpayers might consider expanding the idea and letting us buy more of what we need and keeping the government out of it. This is what conservatives have been saying for years.

What would I do? I’d spend it in a heartbeat. I have more money than I need and I’m earning more than I spend, so I’ve been spending like crazy since September. I figure it’s all I can do to help out.

But wouldn’t it accomplish exactly the same thing if the government took that money and paid it out in exchange for some work? The government (i.e. we the people) would get something in return (some new bridges, some research work on alternative energy, etc), and the money would still get out to people who would spend or save it.

If I suddenly had $6000 extra, I probably would spend it. Right now I’d be tempted to use it as a down payment for a new Honda.