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!