The Associated Press reports that Congress has reached an agreement on an economic stimulus package. The report does not estimate the total size of the package, but it says that taxpayers will receive rebate checks ranging between $300 and $1,000 per household. Businesses will get tax breaks as well.
And the devil is in the details. Under the tentative plan, families with children would receive an additional $300 per child, subject to an overall cap of perhaps $1,200. Rebates would go to people earning below $75,000 and couples with incomes of $150,000 or less. Workers would have to have earned at least $3,000 in 2007 to receive the rebates.
Businesses would receive $70 billion in tax breaks to invest in plants and equipment, and the plan would give small businesses more generous expensing rules and allow businesses suffering losses now to reclaim previously paid taxes. Furthermore, the plan would raise the size of the mortgages that Fannie Mae (NYSE: FNM) could buy from $417,000 to $700,000.
So what does this all mean to you?
If you're among those whose income has remained flat over the last seven years while prices of gas, fuel, and food have skyrocketed, this plan will help a bit. If it passes in its current form, by June 2008 this deal will put enough money into America's pockets to cover part of a month's worth of bills. And it will probably add somewhere between 1% and 2% to America's $14 trillion economy. Plus it would lower the interest rate for the huge mortgages undertaken to pay for houses up to $700,000.
But this plan has been designed to give political cover to its proponents. The current administration hopes it will push the recession into 2009. And presidential aspirants hope it will buy them some votes -- or at least keep them from being criticized for not caring.
While it will put some more money in the pockets of many, it will add about $150 billion or more to the deficit. And that could cost you more as the dollar drops in value.
Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Reader Comments (Page 3 of 3)
1-25-2008 @ 4:25PM
RICK said...
You all forget this money going to illigals and peop;le living off the system will help the drug dealers prosper. Think of all the drugs they can purchase to help the economy
1-25-2008 @ 10:30PM
PDS said...
Why don't some of the executives at the top of the large oil companies take a cut in their salary instead of making more and more money off of those of us that don't even make it to $30,000 a year or less and need to have gas to get to work everyday. Do they get an economic stimulus check in the mail too???? Adding to that why don't credit card companies lower the percentage rate for everyone. Don't you think they make enough money???? And what happen to all the money that was supposedly found in Iraq, where is it now? And why do those on Social Security and medicare don't have enough to get them through to the next day or do not buy needed medications because they are to expensive!
When is this beautiful, free country of ours going to be better for everyone who lives here?
1-26-2008 @ 12:41AM
fed up with parent bashers said...
Why do people insist that people with kids get more "free" money. Could it be that we put more money back into the economy on average than people who choose to not have children. Grow up! Oh, and for all those people who think those people who don't pay "in" to taxes will spend it on drugs, alcohol, and smokes.... are you trying to tell me that the rich don't do those things... I don't smoke, I'm not a druggie, and I do not drink... hmm I think that being a druggie tends to be a wide spectrum problem... grow a brain and try again.
1-26-2008 @ 11:34AM
Tony said...
I to cannot believe how this country has gone down the toilet in these last few years, I got my social security card when I was 10 years old, and have been working now 59 years,I just lost my last job 3 weeks ago,I am 69 years old and have had to work just to pay rent and for food, meds, gas,ect, I don't know if I can find another job due to my age, health ptoblems,no jobs out there.I can't make it on S/S- So it looks like I will proably be home less in the next few months and I can't believe that this country that has so much money and can afford to spend 1billion dollers a month on irag, cannot take care of its seniors???Alot of other countries always have taken care of there seniors medical and housing needs- why can't the USA? Greed, Greed, our Gov't is selling us out, I am a Vet and servered in Korea,I have thought about this alot and I think we are going to see civil unrest like we have never seen before in the history of this country all because of greed!!!!
1-27-2008 @ 12:03AM
lnardozi said...
Just remember one thing - Ron Paul for the Long Haul! Only Ron Paul will cut spending by 50%. Like to get half of the taxes you paid the government back? Want to stop paying taxes on tips? On Social Security? On ALL savings? On capital gains (of which you'll finally HAVE some)? Read the 4 point economic stimulus plan outlined by Ron Paul at http://www.ronpaul2008.com/Prosperity to find out more!
1-26-2008 @ 11:01PM
mrabenort said...
greedy please! IT IS THE PEOPLE MAKING AND PAYING THE TAXES BUT THERE TAX REFUND WILL BE GIVIN TO SOMEONE WHO ONLY WORKED ENOUGH TO MAKE $3,000 A YEAR AND THEY GET ZERO! WHAT ARE WE IN FRANCE A SOCIALIST COUNTRY! THE RICH WILL TAKE THERE COMPANIES OUT OUT OF THE COUNTRY AND OUT SOURCE THE WORK THERE AS WELL. THEN THERE WILL BE A JOB SHORTAGE AND A BIGGER BURDEN ON THIS COUNTRY WITH EVERYONE STANDING IN LINE WITH THERE HAND OUT EXPECTING THE GOVERMENT BALE THEM OUT FOR FREE AS THEY ARE BAD MOUTHING THE COUNTRY AND THE SYTEM THAT FEEDS THEM!
1-27-2008 @ 5:03PM
Clay said...
I have worked hard to get where I am today and I still have to carry people who think I should get nothing because I make too much. I'm tired of carrying you lazy saps.
1-29-2008 @ 3:49PM
don said...
I am male, 42 years old, full custody of my 16 year old daughter, and make 54k a year, working 5 days a week. Would this be considered a family or am I SOL on the refund for my daughter?
Also I do not get back 1/2 of what I pay in each year because I make too much for the child tax credit.
1-29-2008 @ 7:57PM
Mary L said...
We made about 80k this year. We paid almost 14K into taxes paid out 1200 in child care for my stepson whose mother pays nothing for( she thinks letting him vegetate in front of TV for the summer is just fine the neighbors check in on him or his older brother may or may not be home).
We pay a healthy amount in child support, that's fine I have no problem with that. Her household income is about 130k so she'll get 1200 plus 300 per child and claim the child care credit. She has him 30 more days a year then we do so she gets all the credits
I can't gripe I'll take our 1200 and put it in the bank to pay next years taxes or electric bill. I resent the fact because I make under the limit that I'll spend it on junk. I work 48-56 hours a week in a job where the money makers, that my money goes to can yell when I tell them they need work done on their vehicles or the price of an oil change has gone up 25 cents. While they waste the gas with their giant gas guzlers. They need these in a state that may get a combined snow fall for the year of 12" and to drive their 2 kids around. My husband works about the same amount of hours and a part time job a couple of days a week.
1-31-2008 @ 7:36PM
john sellick said...
i am on social security disability and am 64 years old,i am married and own my modest home and have to live on 1200 dollars a month,so if the goverment is giving some money to people i sure would love to get some and not people who earn 100,000 thousand dollars.i worked 40 years and payed taxes and could never afford to put money away.my wife cannot work because she had cancer twice.i also put in 4.5 years in the u.s.marine corps during veitnam.
2-01-2008 @ 12:07PM
Steve said...
How much good is $600 going to do? In reality the handout won't make enough of a difference to those suffering economic hardships because if $600 rescues anyone for a month then the next month they are right where they were before. I don't like my tax dollars going towards a $600 shopping spree for those that are not needing this. I might be able to buy more food and pay my mortgafe for a month. I am sure others are going to buy a playstation or an xbox and I am not certain I like the deficit increasing so 'everyday' people can spend my tax dollars on stuff I can't afford. They should lower the payouts to the poor (30k and under) which would increase the payout and make a difference where it really counts.
2-13-2008 @ 11:27PM
rebate receiver said...
I don't know what all the fussing is about.
All you rich people out there who make a lot of money all the year round, don't deserve to receive a rebate check. Can't we "poor" people get a break for a change. I'm a single parent whom work on the same job for 13 years most of my life I worked two jobs. I don't rely on welfare or no other kid of help, but for what I work for. Anyway, why are you complaining about? He have already signed the darn thing now, get over it. ha ha ha. I'm especially talking to you Richard and program hater.......just get over it already.