12

2009 Individual Stimulus Money Worth More Than Last Year’s Package.

Good idea or not, President Obama’s individual economic stimulus package is worth more to each person than the last one was that was done under President Bush. Bush’s stimulus package gave every person $600, while Obama’s gives each person about $13 a week…or $676. The difference? We got the $600 stimulus package in one fell swoop, while this new one will be spread out over a year. I have been getting many emails from readers complaining about the $13 a week, saying that it won’t do much of anything to stimulate the economy. And instead of emailing each person back, I figured I would just write up a quick post about it instead.

Sure, $13 a week doesn’t seem like much of anything – many people wonder how that is going to make that much of a difference in their daily lives. It isn’t – but that doesn’t mean it won’t do what it is designed to do. By putting just a few bucks into each person’s paycheck over the course of the year, that money will be spent one way or another on goods and services. A extra few bucks at the grocery store; a little more gasoline; one extra quick dinner out. With the $600 stimulus check, most people either A. paid off existing debt or B. put it in their savings account. It didn’t really do anything to stimulate the economy. This new package is designed so that each and every week, there are a few extra bucks that get spent on random, small items – ensuring that the money does in fact get spent this time around. It’s quite a smart move, even if you don’t agree that we should have the stimulus at all.

This part of the Economic Recovery Act is not designed to help people pay off debt, buy flat screen TV’s or put money in savings…it is designed to pump money into the economy. So for those people looking at it like it should be bigger or sent out in check form like the last one, this is the reason why it is not being done that way. That did not help the economy at all, and this version is designed to work in a different way. Each person is actually getting more money than they did from the last stimulus package, so keep that in mind when looking at the big picture.

As for the legitimacy of the stimulus package (and of course the rest of the economic ideas), only time will tell if it will work. Anyone who says they know it will or won’t is making things up – no one knows. All I know is that $700+ billion was handed to the banks last year with no strings attached, and they are already back asking for more because they blew it on jets, trips, office redecorating and bonuses. We handed the auto industry a ton of money, and they too are already back feeding at the trough. So while they are now spending $700+ billion on job creation, infrastructure investment, and the rest of this stimulus package, at this point I think it kind of needs to be done to hopefully prop up this failing economy. And in all honesty, and I know some of my personal finance blogging friends will disagree, it is about time something gets done for regular people rather than just big business and banks. Tax cuts alone will not save us, as the last 8 years has shown. After all, not too many people in government complained when money was handed to the banks – so I am surprised so many are complaining about money being spent on this stuff that hopefully will benefit all of us as a whole. There is of course some fluff in there that could be eliminated, but this is the federal government we are talking about – and both parties always fill up on this stuff when they can. It’s just that they go about it in different ways. I am not a fan (believe it or not) of just handing out money to anyone with no strings attached, so hopefully they have real checks on where and how all this money is being spent.

Anyway, that’s the scoop on the stimulus package and why you are getting $13 a week instead of a check in the mail. Hope it helps answer all those questions, and if you have any more feel free to ask away!

Be Sociable, Share!


Like this article? Please consider subscribing to my full feed RSS. Or, if you would prefer, you can subscribe by Email and have new posts sent directly to your inbox by entering your email address in the box below. Your email will only be used to deliver a daily email and you can unsubscribe at any time.

Comments (12)

Trackback URL | Comments RSS Feed

  1. How are we getting the money? A $13 check in the mail every week? Sorry, to be out to lunch.

  2. A few words: Gift, horse, mouth.

    I boggles my mind that people disdain this sort of help from the government. Oh, I understand that it’s not enough to salvage some of the horrible situations that some people are in. But it’s better than a kick in the pants, as my grandfather would always say. Small amounts of cash, carefully conserved and used, have the power to make huge differences in peoples’ lives.

    Just for fun, I ran the numbers as if we added the $52/month to our mortgage payment as an additional principle payment. We’re just over two years into a 30-year mortgage. That additional $52 payment each month would knock 5 years and 1 month off the term of our loan.

    That means $13 per week would get us completely out of debt more than FIVE years early. Does is still seem like a trivial amount? I doubt we’ll be getting such a handout for the remaining term of our mortgage. But treating small amounts of money as trivial and meaningless is a part of what got us into this mess in the first place. Remember the latte factor? A serious latte habit will easily cost you more than $13 per week.

  3. David says:

    Nate, it’s $13 less taken in taxes.

    Great point Kate; people will always find something to complain about though!

  4. Rini says:

    Actually, the Making Work Pay credit is only $400 per person, as of the last information I read. It is true that $13/wk for 52 weeks would come out to over $600, but keep in mind that the new withholding tables did not go into effect January 1st.

    In fact, I believe that the $13/wk number was calculated based on the original start date of June 1st ($400 / 30 remaining weeks = $13.33/wk). Now that the start date has been moved to April 1st (or earlier, depending on your employer!), that number may indeed be lower ($400 / 39 remaining weeks = $10.26/wk).

    Of course, if I have missed an announcement, please let me know!

    On the other hand, the tax credit will apparently be available in 2010 as well (presumably this time at $400 / 52 = $7.69/wk?), bringing the grand total to $800 per person received.

    So the thesis statement here is still, at least, correct! If you don’t have kids.

  5. Jimmy says:

    Regardless of the actual amount and frequency at which it’s doled out, I’m still using it to pay off debt. Sure, it won’t make much of a dent, but thanks to all of my weekly “snowflakes”, I’m now dropping nearly $1,000 a month on my car loan and it’ll be completely paid off later this year.

  6. david says:

    Great points Rini, and I agree that it could be more or less depending on how figures out the timetable. Thanks!

  7. WynnKe says:

    Exactly, and very well said.

  8. MikeP says:

    I don’t mind the extra $67 per month that we’re able to “spend”….this will mostly go to debt. My concern is when I sit down next January to do my taxes. Am I gonna get zapped at tax time for this extra “spending” money I’m getting now? Where can I find an answer to this question?

  9. david says:

    No, you won’t. It’s a reduction of your taxes.

  10. Thankful says:

    The reduction in witheld taxes kicked in on my 3/15 paycheck — almost an extra $30 (I get paid bimonthly). I actually prefer this to the big check, that extra little bit is wonderful. The bump will be a little higher this year than next (assuming no program changes), because it will be spread over fewer pay periods as an earlier commenter noted. The actual amount that you receive (rather, don’t have to give to the govt) depends on your tax bracket, your witholding status and marital status, as far as I know. Not sure if people with kids will receive more…

  11. dee says:

    What about unemployed individuals? How is this plan helping them.

  12. shawn d, says:

    I never received any stimulus benefits. Was my employer supposed to add that 13 dollars a week on my paycheck?

Leave a Reply




If you want a picture to show with your comment, go get a Gravatar.

css.php