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Spend your welfare wisely
$168 billion giveaway makes no sense

By OWEN B. ROBINSON

May 6, 2008

Have you received your economic stimulus check yet? I haven’t, but the first wave went out last week.

The checks flooding the nation’s mailboxes and bank accounts are the result of an economic stimulus package passed by Congress and signed by President Bush back in February. The checks are part of the $168 billion package and are targeted at boosting consumer spending, which accounts for a huge percentage of the American economy.

As often happens when something goes through the crucible of Congress, the stimulus package is far more complicated than it could have been.

Eligibility for the check is based on one’s income as shown on one’s 2007 tax return. To be eligible for the full amount, one must have earned between $3,000 and $75,000 for individuals or between $3,000 and $150,000 for couples. If one earned above the maximum amount, then one’s stimulus check will be reduced by 5 percent of the amount above the maximum until one gets nothing.

You may have noticed that the bottom income threshold includes a lot of people who paid no federal income taxes at all. If a person made $3,500 in 2007, they didn’t pay a dime in federal income taxes, but they will receive a check nonetheless.

But before all of you folks earning over the maximum threshold get upset about people receiving a check who didn’t pay any federal income taxes, there are some other facts that should be considered. The stimulus package is not a tax refund. The income thresholds are there to target it at people whom a bunch of politicians deemed worthy to receive it - not at those who paid the taxes to fund it. The federal government also did not reduce any spending to pay for it. Instead, they merely added to the federal deficit to pay for it. It’s a straight handout.

Congratulations. We’re all on welfare now.

We all know the real reason for the stimulus package, don’t we? After all, few people think it will change the fundamentals enough to actually change our economy. It’s like tossing a few bucks to a guy with a "will work for food" sign. It won’t change a thing. The real reason for the stimulus package is quite simple: the politicians in Washington wanted to pose for cameras and say that they "did something." Simple enough, eh?

The politicians in Washington may get the credit they crave - whether they deserve it or not. The numbers for the first quarter - from earnings to employment - are better than expected. The economy is not in recession, nor has it receded for a single quarter. The economy isn’t great, but it’s not collapsing either.

Many people are beginning to see the economy in full recovery as soon as the third quarter of this year. If that comes to pass, expect the politicians to take credit and cite the stimulus package for staving off a recession. That’s bunk, of course, but false credit is the currency of politics.

When you receive your stimulus check, the politicians want dearly for you to go spend it. They don’t care on what you spend it. Just spend it. Buy a television. Buy a Wii. Buy a new couch. Buy a reciprocating saw. Whatever. They don’t care. They just want you to spend in a way that would make the politicians proud.

America’s retailers are stepping up with deals to help you spend your welfare check. Sears and Kmart are offering 10 percent to anyone who trades in their check for a gift card. Wal-Mart is offering to cash the checks for free and is cutting prices on certain groceries if you buy them with your check. Pick ‘n Save is also offering a 10 percent incentive if you convert your check to a gift card. A $300 check could be converted to a $330 gift card.

Despite what the politicians want you to do, you should feel free to spend your check as you see fit. If you have some debt, pay some of it down. If you want to invest the money, go right ahead. If you want to save the money for a rainy day, that’s fine too. If you want to give the money to your favorite charity, have at it.

The point is that nobody should view their stimulus check as merely free money to be blown on a frivolous purchase. Yes, it’s a welfare check, but it’s not like you can give it back. Incorporate it into your budget and spend it wisely. At least spend it more wisely than our politicians would. That should be easy.

(Owen B. Robinson, a West Bend resident, is a blogger who publishes at www.bootsandsabers.com. His column usually runs Tuesdays in the Daily News.)

 


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