Millions of Americans will receive an extra check this tax season from the economic stimulus package, but a recent poll may suggest it will not help boost the economy. An Associated Press poll surveyed more than 1,000 people to find out what they plan to do with their extra rebate check – pay off bills, save or invest, spend or donate. The poll, released Feb. 8, found 45 percent of recipients will pay off their bills and 32 percent will save or invest. Only 19 percent will spend their rebate, and 4 percent will donate it to charity. The economic stimulus package will give independents $600 and couples filing together $1,200 if they earned more than $3,000 this past year. The package will also include an additional $300 for any children people may have. Those with an adjusted gross income of more than $75,000 – or $150,000 for couples filing together – will either receive a reduced check or no check at all. Dek Terrell, director of the University’s Division of Economic Development, said saving is good for long-term growth. “The economy turns saving into investment and firms invest in … technology,” Terrell said. “However, if government borrows to increase private savings as in this case, there is no impact on national saving and no benefit in this regard.” Travis Pittman, international relations senior, said he is going to save his money when he receives his rebate. Pittman said he plans to put his money into an individual retirement account because it will offer him more money to spend in the future. Terrell thinks there will be a marginal boost created by the stimulus package. “A more targeted approach of sending a stimulus into particular sectors would have been better, though not politically as popular,” Terrell said. Paul Rittell, ISDS junior, said he plans to pay off his debt when he receives his extra check. “I hate having debt,” Rittell said. “I want to pay off my debt so I don’t have to worry.” Some experts have raised questions about whether the money should be spent on domestic or international goods. Terrell said it is sometimes difficult to determine what is domestic and what is international. Many American companies have their products assembled overseas, while some foreign companies assemble their products in the United States using foreign parts. Pittman said it does not matter which companies people buy from. If foreign companies make profits from Americans, they will spend those profits on U.S. goods, Pittman said. “Goods are produced where it is cheapest to produce them,” Terrell said. Jennifer Kosemund, biology senior, said if she received an extra check, she would buy clothes and shoes. Kosemund said she would buy from companies such as Ann Taylor and Anne Klein – American companies. “I’ll spend the money because I don’t have debt,” Kosemund said. “I have money saved, so there’s no point saving more.” Terrell said an increase in saving can come at the expense of current consumption, and if the demand for goods fall, it could lead to a recession. The Ricardian Equivalence theory in economics says the government is borrowing money to give people the extra rebate check and Terrell said people should know they will be taxed in the future to pay off the government’s debt. “You will have to pay it back later – with interest,” Terrell said.
—-Contact J.J. Alcantara at [email protected]