by M.R. A. Swartz

Created on: April 29, 2008

Economic Stimulus Checks- No Such Thing As Free Money

In May 2008, the United States Federal Reserve is sending Economic Stimulus Checks to nearly 130 million Americans. The plan, to stimulate a sagging economy, is sending a check for $600 to singles, $1200 to couples, and an additional $300 per child for eligible parents. All that is required is a valid social security number, at least $3,000 income per year, and a filed 2007 federal tax return. Nancy Pelosi and President Bush support the Stimulus to help turn the economy around. They hold that the checks are meant to boost the middle class and help create jobs.

High gas prices, crash in home retail, exportation of jobs, and overseas cost competition are all finger-pointers to the slow economy' we are experiencing. One approach to increase the state of the economy is to change its decline. Two-thirds of the economy is based on purchases made by Americans. The idea is that Americans will spend the Economic Stimulus Checks on local businesses, thus increasing local economies. With the influx of money into local business, there is room to expand, create new jobs, and stabilize.

Unfortunately this dream will never happen.

Just the increase in gas prices alone this summer to $3.50-4.00 will sap the entire Stimulus Checks from the pocketbook of Americans. The Federal Reserve is cutting us checks so we can then line the pockets of foreign oil companies? This does not seem like it would stimulate any local economy whatsoever. Even the gas station owners themselves would see zero profit from the increase in shoppers to their stations.

Crash in home retail is causing many Americans to abandon their homes to the bank, because they cannot afford the mortgage. This check does not make a drop in the bucket to affect the underlying issues here. The Stimulus may be a quick fix for people in a jam, but in the long run, the home interest rate will not be altered.

The original problem of job loss to overseas competition as well as those projections here on American soil, such as Wal-mart, will simply be handed the stimulus checks. Wal-mart, the world largest retail company, is offering no fee to cash customers Stimulus Checks. Other large companies such as Sears are offering benefits if the recipient spends their entire check on a gift card in the store. Kenneth Stone in 1997 wrote in Farm Foundation that small towns lose over half their community retail trade within 10 years of the opening of a Wal-mart. So the middle/low-class, which are the primary shoppers at retailers such as Wal-Mart, will be doing the direct opposite of stimulating the economy. Spending their checks there where they will receive the greatest incentives will decrease even more the local spending and thus overall economy.

I know there is no resistance to a bill that gives Americans money. Receiving a check in the mail for $600-1200 from the Federal Government seems so positive. Some may say that it might not work, but hey, its money it your pocket so why ask questions. The Economic Stimulus Checks will not stimulate the economy in any way. Large international corporations will see the majority of the money giving nothing back to stimulate the American economy.

So when your check arrives in the mail or is deposited into your account, be wise where you spend your free money'. The best deals in town may not be the best deals for the town's economy.

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