Friday, January 30, 2009

Help me understand the stimulus?

I kept hearing from relatives that we would soon be getting $1,000 stimulus check again. Then I read over on credit card free's link to a New York Time article that the stimulus will not be a check but a payroll tax decrease in the form of $1,000 per married couple (after you have earned 8,100 income).

So let me see if I am understanding this. My husband gets paid every two weeks. So basically the government is saying they will give us a decrease of $1000 on our payroll taxes. If you get paid 26 paychecks a year that works out to be about $38.00 more a paycheck.

Does anyone think that amount will make you run about buy more stuff?

If anyone makes money off of won't be the banks, nor the car companies, or electronic corporations. It will be your local McDonalds, Starbucks, Krogers, or the infamous Wallyworld that will likely see that $38.00 bonus money.

If you think I am wrong with how this plays out then please explain what you think it will mean. I think the giant check of $1,000 to people is more likely to stimulate than $38.00 extra dollars every two weeks. I am all for trying something new, but I kind of doubt this form of delivery will work.

Just for the record....I am personally against all of this stimulus stuff. I am a republican and very much for less government and less taxes. I would have hated to see these giant corporations and banks fail, but I do feel that we would have recovered. I think letting some big corporations fail would lead to smaller ones starting off, more of bringing the gap from rich to poor closer kind of thing..but that opinion is for another post. What's done is done. Now I am just thinking about us and how to better our family by becoming debt free.

So how do you feel about this delivery of the stimulus money? Do you think it will help and help quickly?


  1. I was under the impression that it would not be over the course of a whole year, but rather one quarter of a year. So that it would be more money per paycheck as a "bonus" (less tax withheld.) I would guess most people will relax their budget and go out to dinner or do something like that with the money.

    Is that what the intent was, just to get the money flowing? I've never really understood how handing out money so it can circulate is really going to jumpstart anything. I'm not an economist, though.

  2. You make a good point about the handing out of money and what it does to jumpstart anything! I haven't figured that out either.

  3. Just send the money to your 401k and further reduce your tax liability!