Say No To A Second Stimulus Check
By Pinyo • Jul 22nd, 2008 • Category: Personal FinanceBefore I start, I should say that the first economic stimulus check did come in handy. There were a couple of big bills that were piling up, and the stimulus check stopped me from digging into my margin account. However, I am not too thrill about the possibility of getting a second economic stimulus check.
Photo by NickStarr via Flickr
Whenever I hear other people talk about another stimulus check, it reminds me of the Chinese proverb:
Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.
Why Another Stimulus Check Is A Bad Idea?
By handing out these checks, I think our government is just trying to keep us happy; instead of doing the right thing. Some of you may ask: what’s so bad about getting free money from the government? First, we should realize that there is no such thing as free money. That money has to come from somewhere. You may not see it immediately, but handing out money now could mean getting less somewhere else later (e.g., infrastructure, social programs, education, environment, etc.), or it could mean higher taxes down the road, or it could result in inflation.
Instead of handing out money to stimulate the economy, the government should be doing things that matter — teach us how to fish. Here are some ideas:
- Cut unnecessary spendings here and especially abroad. I am not going to mention the various “We Are Right” problems, but it’s obvious we are spending money in the wrong places.
- Take steps toward reducing the U.S. trade deficit. While we are spending our money on imports, other countries are buying up pieces of America (be sure to follow this link and you’ll be amazed). Perhaps we need to rethink the word PATRIOTISM.
- Spend money on educating the American public on better money management and economic theories. To me, it’s mind boggling that money management classes are not offered in high school. Personally, I feel that money management is more vital than classes like art, language and literature, and a few others; especially considering that many students do not go on to college and would find money management skills a lot more useful that something like art.
Okay, enough with the politics and let’s focus on what we can do. As Pete from Bible Money Matters said, “Another stimulus check? Maybe, but why not just create your own?” Here, Pete offers 10 ways to create your own stimulus check. If you are looking at more ideas, here are 22 Money Maximizing Moves You Can Do Today and more than 40 resources and ideas on building alternative streams of income. Instead of waiting for another economic stimulus check, you can learn to manage your money better and make the most of what you already have, or simply earn more money — create your own economic stimulus check!
It’s insane that there’s talk of a second check already. It must be all politics with an election coming up. The Fed can’t even determine yet if the first checks had a big impact. Truth is we really don’t want a second check since that money comes out of taxes anyway. It just means we can look forward to paying more in the future!
You make a great point regarding supposed “free money” from the “government.” We are the government! Taxpayers are footing the bill for these checks.
I predicted another stimulus check on my blog a few weeks ago, because I knew the first round of checks would not be enough to stimulate the economy. I figured most people would save it, or put it on debt balances, which it seems many of us did (myself included). Perhaps a second round would more likely be spent rather than saved, but I say let the markets correct themselves over time rather than artificially inflating spending.
kudos on thinking outside the box…great article!
Thanks for linking my article Pinyo..
As mentioned above, there is no such thing as “free money” although for some people who are getting the rebates that don’t pay taxes, it may feel like it.
I can’t say that I would turn down the money if it was to come my way, but I also can’t say I’m for more of these stimulus checks. I’m not convinced they’re really doing anything except buying votes for the upcoming elections.
Let’s let the markets correct themselves like Jason says.
You want to see how much damage the last stimulus package may have done? Check out the charts here: Crude Oil Prices and the Economic Stimulus Package
I could not agree more…like the first one was not bad enough! Now they want us to owe them for 2 checks? No thanks…
I think too many people expect the government to take care of them and give them money and other aid. That isn’t the way it works, nor should it be the way it works. I wasn’t a fan of the first stimulus check from the standpoint that it isn’t enough money to stimulate the economy - especially as we are mortgaging our future to get it now. A second check? That is even less attractive.
Maybe they should put the money into better government health care, or international aid or something instead of giving it to the people who already paid their taxes anyway.
Or instead of giving out more cheques just get us to pay less taxes
Another factor is the cost of creating a second check. It would have been smarter to just increase the first stimulus check if that was necessary.
Mike
This whole concept is so ridiculous.
I am not a big fan of socialist plans, but it makes more sense to me to make people work for the stimulus money.
What does more for America? Giving people $1200 to spend on a TV or vacation or spending that money hiring people to build a road or a school. At least the taxpayers get something out of the New Deal type scenario as opposed to just encouraging people to sit on their butt.
We cannot say no to a second stimulus check because the Fed Reserve leaders are not elected officials. They can create ten stimulus checks if they want to, and congress is sure to go along with them in an election year.
Ron Paul was right, the Fed Reserve is the biggest taxer in the entire world, by continuing to increase the money supply - they are inflating away our debt. If they increase the money supply by 3 trillion dollars in the next few years, our national debt of 9 trillion will be reduced in value by 30%, while everyone invested in dollars or dollar based assets will lose 30% of their purchasing power.
–Got gold?
I don’t know what your problem is. I think that the government has a DUTY to ensure that I can afford the new iPhone, without it there would be no way for me to be cool.
Didn’t like the first one and certainly don’t like the idea of the second one. What I find odd in this economy, is the lack of talk about what we, as a country, are PRODUCING! It is all about consumer economy. What of substance do we produce for others to consume. Heck, other countries are consuming ours, by buying it up. Soon, almost all of what we have of value, including our land, will be owned by other countries. Welcome to the “melting pot.”
Oh, I agree that we shouldn’t be giving out the $ and spending it elsewhere as we’re already pretty deep in depth, but I wrote an article earlier this month that might have some legitimacy here. It basically finds that the it may be a little bit of bait to catch a bigger fish for them as you need to fill out a 1040A or EZ form to be eligible - is it worth it though? Might be…
We spent roughly 150 billion dollars on stimulus checks this year. That’s a lot of money yea? Well, considering that there are amount taxpayers are skipping out on paying is over 400 billion dollars, it may be worth it to the government to send out 1 check, but I’m not sure about this second - even at 300 billion you’re ahead if you can catch most of the cunning criminals, but like in Vegas, I’d quit while I was ahead!
Pinyo,
I haven’t totally thought through the ramifications, but I would love to see the government spend stuff like bailout money on education. Not education that forces and opinion, but education that helps create dialogue about ideas that move us forward. Education that empowers the citizens to take control, not the government. Ultimately government should be trying to work themselves out of a job in a sense.
Not obviously in the age of rampant aggressive political divisiveness it becomes tougher, but that is another thing that needs positive dialogue.
I agree with you about the 2nd check. I disagree on some points of “teaching us to fish”.
Yes, we should stop spending billions abroad. I’m with you there.
I disagree on the imports. Trade deficits essentially mean that other countries are willing to sell us goods for really cheap. Think flat screen TVs, Toyotas, etc. We could make them here, but the price would be higher.
I think a massive upgrade in our infrastructure is needed as seen by some of the unfortunate bridge collapses in the past year. Start up a new “New Deal” to hire Americans to do this work and stimulate the economy that way through the trickle down effect.
This is not free money from the government!! And it is not a present. This is an ADVANCE on your income tax for next year. The income tax schedules will be adjusted for these stimulus checks. It’s really just a loan from the government.
One wonders when they’d stop. If the first one didn’t work…yeah.
Speaking of spending abroad…the US gave $2 billion to Israel last year. I know there are trillions at play here, but that seems like one place where they could cut costs. As I understand it, Israel gets more US dollars than any other country. I’m not entirely sure why the US gives away money it doesn’t have to other people anyway, but I expect they could cut a lot of that out.
And NASA. I’m sorry, but even if one could classify foreign spending as important to national security, a lot of NASA just isn’t necessary. It’s nice, it’s pretty awesome, but if the country doesn’t have enough money for things on our own planet, I think we should fix those first. If there’s a surplus, no deficit, and key public things like schools, roads, whatnot are taken care of…then let’s talk about space again.
Good one Jeff. They will probably offer stimulus check cashing at the Apple Stores.
You are a hypocrite. I figured that out in your first sentence. You can’t say that it’s ridiculous we may be getting a second stimulus check, buuuuuuttttt, the first one was pretty handy, I had some bills piling up. That’s absolutely ridiculous, for obvious reasons.
@Rosemary - I didn’t find any support for this money actually being a rebate when I researched it a while back. It really seemed like free money.
I addressed the question here with quotes from the IRS - what is the stimulus payment?
I definitely agree with you, Pinyo. There are many reasons why it’s not a good idea. If the gov’t really wanted to help certain sectors of the society they can do it with a fair-tax system. This truly is a lot of PR and a “band-aid” kind of solution to US economic woes. Unfortunately the next president won’t be able to make quick fixes either, because the problems run so deep. But hopefully he will get the ship pointed in the right direction again.
Where did you get the information about getting a second check? I have never heard about it… I watch the news, and read newspapers and what not.. is there a secret society of stimulus check payments?
Yes Red, it is a secret society with doors into the Treasury!
My economy is running on fumes, and could use all the stimulus it can get.
My first stimulus check went into my emergency fund…if I get a second one, I think it will go to the same place. I think a second check is a bad idea too…
My first stimulus check never arrived, I just got a computer generated letter.
The Malaysian Government is also doing something like this. Wonder who taught whom?
They raised fuel prices by 41%, then started doling out all kinds of other subsidies in the name of wanting to reduce the burden.
I think the only thing they have created is lots of talk about their ill planing and tons and tons of paperwork.
Thank you everyone for your comments!
@Pete — I wouldn’t turn down the money either if it happens. I just don’t think it’s the right solution.
@John — That’s interesting stuff. I agree…more money in circulation = inflation.
@Michael — I like that idea. God bless FDR. Here’s the link in case anyone is not familiar: http://en.wikipedia.org/wiki/New_Deal
@Hank — That’s an interesting concept, do you have any link?
@THR — Great idea.
@No Debt Plan — Thanks for sharing your viewpoint. I am not going to argue the trade deficits issue because even experts can’t agree on the consequences. I just don’t like the fact that we are buying cheap plastic toys and they are sweeping up American companies, etc.
@Peter Calloway — Thanks…just because I find it handy, doesn’t mean I have to like it. I could easily afford to pay those bills without the stimulus check.
@RED — A couple of news from Google news search: http://news.google.com/news?q=.....8;ct=title
Indeed - here be the link to the fascination - http://myinvestingblog.com/200.....criminals/
Totally agree the government shouldn’t be handing out another stimulus checks. I may be biased though, as I didn’t get one in the first place
Actually, I believe stimulus check should be avoided like plaque.
If you work for somebody just like me, think about this: if every American said, “Thanks but I won’t need it” to your president’s stimulus check and refused to cash them, the worth of the dollars in your pocket right now, in terms of their purchasing power would go up by a factor greater than the face value (e.g $600) of the stimulus check. In other words, if you didn’t use these checks, you’d be the better-off for it.
The rationale being that America does not have a hard-money economy; it’s a debt-based fiat currency economy. All the funds in distribution in America has been borrowed and then re-lent. So borrowing more funds (e.g $168Billion for the stimulus package) and then re-lending it, as Bush is doing, only adds to the debt load and debases the value of the currency outstanding (against a backdrop of stagnant wages and minuscule interest rates for savers).
If an American was planning to spend $30K this year on foodstuffs, garments, home, health and various other expenses and they were hoping to pay some of that cost thanks to Bush’s stimulus check comprehend that by simply adding another $168 billion of debt (the cost of the stimulus package) on top of America’s current multi-trillion debt load will continue the trend of debasing the purchasing power of your money and, therefore, increase the price of goods and services by more than the $600 ‘gift’ (without a commensurate rise in wages or increase in interest paid on savings).
This is why America’s debt troubles won’t go away. Every dollar spent adds debt and spawns more fiat currency issuance which has the effect of decreasing the purchasing power of the U.S. dollars in your pocket. Bush tries to make up the difference by borrowing even more; borrowing 340 million a day to fund the war and close to 3 billion a day to cover U.S. operating expenses, not to mention Wall Street borrowing over $30 billion a day to keep their scheme going. All this borrowing keeps alive the vicious financial spiral trending lower towards permanent currency debasement and possible sovereignty loss
I agree that the market needs to correct itself. We all just need to realize that the economy goes through cycles of being awesome and being not so awesome. Right now - not so awesome. But if we all just relax about it and keep our heads on straight, everything will go back to being awesome sometime soon.
I think that the government should take all the stimulus checks that they are thinking about giving us and use them to pay down some of our national debt. I would like to see that happen at least.
Are We getting a second stim check? I have heard both — yes and no.
From the page: “You may not see it immediately, but handing out money now could mean getting less somewhere else later (e.g., infrastructure, social programs, education, environment, etc.), or it could mean higher taxes down the road, or it could result in inflation.”
It does mean higher taxes, it does result in inflation… there is no “could” about it. Any time they are not refunding a surplus of money, they are spending your future dollars. Not only does it force the issue of higher taxes in the future than what we would have been paying otherwise, it devalues your money in the present.
This is what economics teaches us. Take gas prices for example. When the announcement was made for the first economic stimulus check back in January, the average price of gas in the US was about $3/gallon. By the time people started receiving their stimuli in May and June, gas was at $4/gallon. Keep in mind that there are no adjustments on the supply side in that time period. OPEC made no announcements about cutting production, which means that the price increase is on the demand side. And it can be very closely linked to the so-called economic stimulus package.
For almost the entire previous YEAR, gas prices were hovering around $3. But as soon as we knew that people were going to have billions of dollars flowing back into their hands (and through the economy), gas prices went up by 33%. That means that your dollar buys less gas now than it did before the stimulus check announcement. This is called currency devaluation. This is called inflation.
And thanks to the even larger deficit that we now have because of it, taxes will be higher in the future than they would have been without the stimulus check.
Sorry Sam, but I work for minimum wage and my economy needs all the stimulus it can get!
I agree - I’d rather see the money spent towards building infrastructure and creating jobs. How about two birds with one stone? Create tax incentives to promote renewable energy, thereby increasing jobs in that sector, and providing alternates to high gas prices….
And I have to disagree with Mrs. Micah about NASA! If ever there was a misunderstood agency. lol.
The real problem with all this “economic stimulous” is that it is money that the government doesn’t have. Essentially, we are borrowing money from other nations - to the tune of $60B per month - and we are spending this money rather than investing it. We are simply robbing our future selves.
That is what passes for economic policy in Washington these days.
I feel that if they are going to try and stimulate the economy again, that they should just offer a reduction in taxes as opposed to spending $42M just to notify us when we will eventually get the check (much less the money it actually cost to print the checks and send them as well).
Economic Stimulus check? It is now July 29th and my husband and I are still waiting for ours. No letter came like everyone received and no check either. Yes we filed a 2007 income tax so I am trying to figure out what the problem is. Calling the IRS number is a recording that prompts you to go to one thing after another and then hangs up on you after saying “thank you for calling the IRS.” So do I want to see another check? I’d like to see the first one get to me first and then I’ll decide. The way I look at it, its just another lie told by the worst president this country has ever had.
I’m a single mother who works a full time job, goes to college full time. I receive Zero financial support from my ex husband. I also receive Zero support from the State, because i believe in working hard to obtain what i need. The whole “teach them to fish” theory is an insult to me. I make 7.50 and hour which is a dollar above minimum wage, which leaves me with roughly $250 a check. Gas is 50 a week, childcare is 100 a week, rent is 650 a month, not to mention food, clothes, and utilities, and god forbid i should ever get sick, a doctors’ visit is 73 dollars. So for those of us who bust our butts every week, having a little extra something was nice for a change. How do you teach a person to fish in a dry lake????
Despite your struggle, I think you are on the right path. Many people would resolve to do nothing about it, but you are working full-time and goes to college full-time — it’s an amazing feat, especially with a child. I am sure that once you obtain your degree, things will improve.
I believe in working hard for what I need and want too. But there’s nothing wrong with seeking for and taking advantage of supports that are available to you. If you find that money is tight, then you should do whatever it takes to get help that is available to you and your child. If you feel that it’s not right somehow, you can always pay it forward when you are in a better position to do so.
Lastly, how would I teach a person to fish in a dry lake? Easy, go look for another lake. What’s the point of staring at the dry lake and lament that there’s no fish. Take it upon yourself and go find a solution!