The second stimulus package popular among many in Washington
The idea of a second round of economic stimulus checks being sent out sometime this fall or next spring has been gaining steam in the hallowed halls of Congress. It has been mentioned by a number of Democrats including House speaker Nancy Pelosi, as well as other prominent politicians from both sides of the aisle. Pelosi talked about the first rebate, and the possibility of a second just last week:
“The rebates had “a positive effect,” Pelosi added, “except they have been offset, as has been said by our experts, by the rising costs in other necessities for the American people. So while they may have saved the second quarter from a technical definition of a recession, the fact is that we are into a third quarter and we need to have another stimulus package.“
For the politicians a second round of stimulus payments are a no brainer. In an election year like this the pols are looking for just about any way they can to sway the voters. Giving their constituents money seems to be a great way to do that.
Even if a second round of checks is passed, it sounds like it probably won't happen until fall at the earliest:
Harry Reid of Nevada, said it would be “really hard” to get a package put together before the August recess, indicating that the issue was unlikely to gain momentum before the fall.
Today Barack Obama continued his pledge for a second round of stimulus payments if he is elected:
Obama said the economy needs both short- and long-term fixes, including another round of “stimulus” measures from Congress to revive the economy and a longer-term focus on renewable energy to curb high gas prices and on universal health care to trim costs. He said he would move “rapidly and vigorously” to respond.
So even if we get a second check, it probably isn't going to happen for a while. So don't count on that extra income in your budget! Check out my article for some ways to create your own “stimulus income“.
First check – just not enough? Will a second stimulus be more effective?
The first check doesn't seem to have had enough of an effect, and any positive effects that they did have seem to have been offset by rising gas prices, food prices and prices of other essentials.
From what I've read around the blogosphere it also seems that a lot of people didn't spend their first rebates. A creditcards.com poll conducted March 7-9 by GfK Roper Public Affairs and Media found:
half of Americans don't have spending in mind, with 26 percent saying they'll pay off some debt, and 24 percent planning to save it.
So a quarter said that they planned to save their stimulus payment, and another quarter said they would use it to pay off debt. Not exactly the outcome that the government had hoped for.
Would people be more likely to spend a second round of stimulus checks? My guess is that more people probably would spend it. The fact that they've already used one payment to pay off debt or save means that a lot of people will feel like they “deserve” to spend their second check. I think you would see much higher numbers of people actually spending their stimulus checks the second time around.
Is a second round of checks a good idea?
Is it a good idea to continue doling out checks until the economy picks back up? Or would it be better to just let the market correct itself, even if it means a bit of pain in the short term? I'd love to hear your feedback on the topic.
Personally I'm of the opinion that the stimulus checks are more smoke and mirrors than actual solid economic policy. I can't see these checks having an appreciable effect. I'd rather see a cut in taxes, help for those that are creating jobs, and progress on new drilling for oil to help reduce gas prices. An increased focus on other sources of renewable energy would be a good step as well.
What would you do with a second economic stimulus check?
If a second stimulus package does materialize this fall, what will you do with your check? Will you:
- Spend it (like they want you to)?
- Save it
- Use it to pay down debt?
- Donate the money?
Let us know what action you'll take if you get a second check – in the comments below!