SPRING BREAK BLOG: “Uncle Sam’s messed-up munificence”
Kathleen O’Brien
Newark Star-Ledger
March 29, 2008
When you were a kid, did you ever have an uncle who got drunk at family gatherings and started handing out $20 bills to all the kids?
Even as a child you knew it probably wasn’t right, but you were glad to have the money anyway.
That’s the reaction most of us have to this bogus “Economic Stimulus Payment” soon coming to our mailboxes.
We know it’s stupid, we know it’s wrong, but when that check arrives in the mail, we have no intention of saying, “Return to sender.” We’re cashing that baby.
There are many obvious flaws with the payments as public policy, yet we discovered even one more when chatting with our accountant.
Get this: We don’t qualify for the $300 “child tax credit” for our daughter because she is over the age of 17. Never mind that she (and her college tuition) are costing us more now than at any point during her diaper years. Never mind that we still claim her as a dependent on our taxes.
Then we learned something even weirder: She might get the money!
“Blockbuster and Panera Bread will be thrilled,” said my husband.
She worked two jobs last summer – good for her – so she had more than $3,000 in earned income. That meant the government might place her in the category of the working poor – people who work but don’t make much money.
But … but … she isn’t poor. True, she doesn’t have a lot of money, but she doesn’t have a lot of expenses, either. She’s a dependent with free room and board. Her earnings go to gas and shampoo and movie tickets. (And conditioner, don’t forget conditioner.)
When we first learned of this possibility a month or so ago, we scoffed. The federal government couldn’t possibly be this stupid, we said. I asked a business editor about it. He was dubious. “I doubt they’re going to blanket college campuses with $300 checks,” he said.
Still, there was this bit of internal logic: If we weren’t getting money on her behalf, maybe that meant she’d be getting some herself.
She even received one of those “Important Message from the IRS” fliers at the same time ours arrived. It wasn’t very helpful; we both received the same message. But it added to the general impression that perhaps the feds were alerting her about these upcoming payments because she might be entitled to one.
Like any other red-blooded Americans, we started spending it in our minds.
Eventually it occurred to us that something might be gained by reading the notice. Buried in the fine print was this wet blanket: “Individuals cannot receive a payment if they can be claimed as a dependent of another taxpayer.” I take that to mean neither she nor we will receive $300 to reflect the cost of her care.
So now our household is like the kid at the end of the line at the family party. Just as it’s his turn to get the $20 from the drunken uncle, the uncle sobers up and closes his wallet.
The kid knows he was never entitled to the money, and handing it out to everyone was a stupid idea that would probably get someone in trouble eventually. But still … (whine alert!) … everyone else got the money. And it would’ve bought a lot of conditioner.
NC – Proof Read and Fact Check
This article was great because it made me laugh, and think. I assume most Americans will just cash their Economic Stimulus Payment as fast as they can, and not think about it again. But, it’s important to recognize why Americans are receiving these checks in the first place. Not only are we lacking the “war time boost” like the economy had during WWI and WWII, but in fact we are in a recession. If I remember correctly, our budget deficit is near 4 trillion dollars. The government is just praying that maybe, by giving out money that we don’t have, will fix some of our financial problems, due to America’s “plastic” credit card obsession. But in my opinion, this will hurt us more then it will help. Yes, our economy may see a brief recovery period when Americans go spend their newfound riches. But, the question is…. what’s next? It is going to take a lot more than just this one solution to repair our economy. I think we (everyday Americans, and the federal government) need to completely rethink how we spend and manage our money. Maybe the upcoming Presidential election, and a new President, could get to work on this problem, but it is going to take a long time, and a lot of work.
I personally never had a drunk uncle give out twenty to the kids at a party. My grandma has given ( and still gives) fifty dollars to all of her grandchildren. She yet to fail her Christian charity. Her children (my dad for example) try to tell her to stop being so Christian and save the money for the future. She has yet to be relent. Like our government my grand mother is completely sober, but a bit foggy in the head. The government is under the impression that giving Americans more money will cushion our economic fall. Problem is that there really hasn’t been much evidence that stimulus packages work. We are under the impression they do because sometimes the economy goes up when the package is released. It should be remembered that the government has very little control over the flow of the economy. With the recession at hand I get the feeling that people are going to hide that check they get from the government and bury it up latter like squirrels instead of patriotically spending it.
Yes we are indeed in a need of help. But is this really the smartest way of giving money away. We are giving money to the working poor aka the penny pinchers that are going to try and save that money. The purpose of this $300 dollars is to help us get out of this recession by people buying things. I guess the group that should receive this check is the shopping crazy rich teenage girls who will spend that money right as it hits their hands. We are in a recession just as in The Great Depression. The idea of this is smart trying to help stimulate our economy. We have learned that wartime tests our economy and without constant stimulation, it results in a recession like now. For us to work smoothly requires a mixed economy meaning that we have consumers, employers, borrowers, and much more. Without these, I’m not very surprised that we are in a recession. Before this recession started we have had an extreme inflation (a rise in prices for consumer goods). Most if not all inflations are followed by recessions.
Side Note: Thinking of our “plastic crazy” lives reminds me of the commercial of pay as you go. The main concept is that cash slows us down at the movie theater, the store, or fast food restaurant. How ridiculous that our currency is slowing us down and our plastic is speeding us up, where in reality we need currency to end recession. I just saw this commercial as a connection to how we don’t exactly promote the right kind of activity.
I hope this $300 dollar check to the working poor will help get us back but maybe we should focus who is most likely going to spend this money (maybe look at the people who spend frivolously).
Questions for Kautzman:
Just wondering where are we getting this money to give away? We are going further into debt with the thought that it will be a temporary pain and will remedy our present economic downturn, thus providing more long-term money into the treasury via taxes to repay the debt.
Do you know the amount of people that received this money, statistically? Do you mean the total number or the range of income? Generally, it will go to the middle class wage earners and people w/ dependent children.
-Caitlin Barschig
NC – Connection
This article made me laugh. Kathleen O’brien is a funny writer. It is too bad that I never had a drunken uncle that gave out a few Jacksons after a few too many drinks. I could’ve bought that sweet remote control car! With the notion that money is being given out, there is bound to be someone who doesn’t get any and becomes angry. It makes me think, will the people who dont get any spend more money anyways, because they will see all of their buddies buying more stuff with their checks and they will want to indulge as well? I know that if I recieved one, which I am pretty sure that I wouldn’t. I would act like it is another pay check towards college and put it in the bank. As for this plan actually working, I’m sure that a portion of the money will cycle back into the economy and give it a little boost, but not as substantial as the government officials have hoped for. My opinion is that the government has been chosing which is more important, eliminating the national debt or attempting to boost the economy, for quite some time now, with the exception of a couple recent presidents. The trend is to decide on trying to boost the economy.
NC – Connection
This stimulus package is an annoyingly stupid idea. From what I have read about the tax rebate, single taxpayers will receive $600, with those who are married receiving $1200. Yes, this indeed sounds like a pretty good chunk of money. And at first glance, I can see how some may think this will stimulate the economy when people go out and spend this money. But honestly, I don’t think the $600 or $1200 is going to be spent on new clothes or other typical consumer goods, and thus it is going to fail at trying to upright the economy. The people receiving this money, especially the lower and middle class citizens of the U.S., have better things to do with their cash than go out first thing and buy a new snowmobile. They are going to use it to pay for child care, or health care, or housing costs; costs that are going to need to be paid whether or not the economy is up or down. This bonus is only really going to end up being good for the people who already have extra cash to spare, such as the upper class; of course for the upper class they would probably spend a good amount of money on consumer goods whether or not they got the measly $600 from the government in the mail.
The economic stimulus plan is free money. And I mean…FREE Money. The US Government is just running up more debt, passing it on to further generations, much like it does with other stuff. It’s about time we take away the government’s credit card. In class we talked about the stimulus plan, and the whole budget deficit. This check that I personally will not be receiving (…and I pay taxes too….go figure…) is supposed to encourage people to spend money. As for the government (we discussed this in class and I already said it above) will just leave the debt for us to pay back in 100 years.
This stimulus plan is not going to work. So first of all, we’ll get a few hundred dollars. What can that buy? Stuff from China (and maybe a tank of gas). We won’t be pumping this money back into our own economy; we’ll be pumping it into the Chinese economy. At most, this will just increase Wal-Mart’s bottom line and they can go spend that money on more Chinese products, or hire a few more employees who will buy more products from China. If we’re going to help out our economy, this money needs to be spent on things that say “Made in America.”
Just a random question/thought; we talked about in class how we’ll eventually pay back our lenders (other nations). Is this how we’re repaying our debt to China? Answer: China is one of our many foreign lenders. They hold US debt and we pay them back as the loans come due – this is known as part of the interest on the national debt and currently accounts for about 12% of the uncontrolled expenditures. On another note, they would not be loaning us money if it were not a good/safe investment.
-Jason Wong
The things that you hear about the “Economic Stimulus Payment” seem very clear – you will get your check, spend it. Until you actually read into all of the rules and regulations and exemptions this plan has. Which, the more I hear about it, the more rules I find out about. Now, to me, it seems very smart that if you are 17 and dependent, you don’t get the money yourself. While I would LOVE $300 to use for my books for college next year or to use as part of the $600 we just had to pay as a down-payment just to accept the college and in-house living for next year or even just to use to buy myself some new summer clothes/clothes for college, sending $300 to every 17/dependent teen does not seem like the smartest idea. Even if 17 year olds may be the ones most likely to spend it because we have the least responsibilities, it just doesn’t seem smart. But why not give it to our parents? We are still dependent and still have our expenses. After 17 years of dealing with us and another 4 of just strictly paying for us, why not give our parents an extra $300 to ease the cost of something like our new dorm room supplies: microwave, shampoo, laundry hamper/soap, etc? When Congress sat down to set this plan up, it must have taken forever. Even if everyone isn’t satisfied, there are hopes that it could do something positive for our economy. The ‘recession’ we are in now does not have high hopes for the future. But maybe $300 here and $300 there will help.
The stimulus plan is pretty much stupid. It’s simply another one of the government’s attempts to make things better, but will only worsen things.
First off, where is this money coming from? Let’s think, we have a huge national deficit at the moment, and not enough money to fund the majority of the governments workings. Why spend more? All this plan is doing is increasing our debt. Personally I think the people that are receiving this money can do without it, if it would save us from deepening our national debt. We’re going to have to pay it sometime, and I don’t want to deal with that. It’s not my fault the government is irresponsible.
Secondly, if the government gives us this money to spend, will it be redistributed into the American economy? The answer is no. All of our expenditures will go into the Chinese economy. All of our products are made there, not in the US!
Thirdly, we are (debatable) at the beginning of a recession. So, why would people spend the money? Uncle Sam giving us $300 isn’t going to fix our problems.
I have been hearing about the tax rebates for some time now… I wrote an article on it for the school newspaper (a brief and pointless article, at that) and had a discussion about it with my parents just the other night. Basically, I have come to the conclusion that the “economic stimulus package” is just not going to “stimulate.” One blogger mentioned that while some people (the people who need the money least) will spend it on something of materialistic value, millions of Americans will probably spend it on such things like rent, childcare, bills, and other things needed to maintain their well-being. Perhaps the only people who would help increase the economy are the people who use $20’s in place of toilet paper without feeling the repercussions… but then; they are probably not receiving this rebate because there is a certain income cap. Another good point to bring up… where are we getting the money we are sending out? Well, “simply,” we are just running up the national debt (on that ol’ government Visa card that appears to have no limit…). Unfortunately, many of us seniors will not earn our parents (or ourselves) the $300 that many of our peers are getting. Though maybe a few of us made over $3,000 on our own, if we still claim dependent and are over the age of 17 “we git no cash, mon.” In reality, this stimulus package will probably be yet another negative hit to our national debt… and FYI, none of my drunken relatives ever gave out cash.
By the time college rolls around, most of us will probably be 18 (well… I already am for instance), so we’ll never have seen the $300. Tough break. But then, $300 dollars isn’t that much in the long run. You can buy groceries for a few weeks or something. Our parents will see small things like, $1,200, if they’re married and up to $600 if they aren’t. I’m sure they wouldn’t complain, though. Extra money. The only thing they had to do to be eligible for the “Economic Stimulus Payment” was file their 2007 tax returns.
I can’t remember if we talked about this particular subject in class, but I do know that I’ve discussed it before, in a class. It kind of worries me. The budget is proposed by the president and set down by Congress. Actually, you can download the budget yourself to see what the government is spending on what… 2009’s ‘fiscal budget’ is already set, for instance. So…
My question is thus.
If they’re giving us free money, and a vast majority of people do what they’re “supposed to” (i.e. spending it) does, in turn, create inflation?
Where objects go up in price…
They can’t exactly tell us where and what to spend it on either.
Most of us don’t think this is going to work, though. At least, most of us students reading this article, and even from the tone of the author you can tell. She is basically saying that our government is drunken Uncle Sam (clever). So. Why are they doing it? Are they afraid of another Great Depression, or something?
What would it take for the economy to crash? And, is our economy really in that bad of shape, that we need to hand out free money?
I never had an uncle that got drunk and gave out twenty dollar bills, but that sounds like that’s what these “Economic Stimulus Payments” are. I bet many families will or are in the same situation they have children in college and they don’t get the $300 “child tax credit”. It should be that many families do get the tax credit because they are paying so much money to get sometimes-crappy education. I do not know many children who work very hard in college and make less than $3000 a year. It does happen in high school that students make less than that. It should be the parents that get the tax credits because they pay for a lot of the things that the students need and they will be the ones that need the money. Some students will buy drugs, toys they don’t need. I feel that everyone could use a $300 credit no matter whom they are. Homeless people can always use money if they have help spending it. Well ok, not everyone. If they file taxes no matter how much they made at their job. They could always use it or at least their parents can use it.