I read with interest the announcement by President Bush that his administration reached a bipartisan agreement with House leadership on an economic growth packagethat would provide tax rebates of up to $600 for individuals and $1,200 for couples. Families eligible for this program would also receive an additional $300 per child.
In my case, we would receive $1800 from the federal government sometime around mid-April to mid-May, depending on how quickly Congress gets the compromised bill back to the President.
As I mentioned previously, I will gladly cash any federal check that the Treasury Departent wants to send me. I remain skeptical, though, that $150 billion in tax rebates and business tax credits will provide much more than a temporary boost to the $13.86 trillion U.S. economy. Moreover, the tax rebates will exacerbate the projected $219 billion budget deficit in 2008, making the federal government a competitor in the shrinking credit market.
Given the rampant pessimism about the economy - nearly half of Americans fear a recession is on the way - I suspect that most people will be conservative with any rebates they receive, using the money to pare down debt, to purchase home improvements like tankless water heaters, or to boost emergency savings, much like blogger Momof3 plans to do.
Me? Most likely we will pay a few annoying bills, and take any leftover cash with us when we travel to Europe this summer. In our case, little of the tax rebate will spark economic growth here at home, though a few bistros in Barcelona and Milan might be appreciative.