Hernando Today
When Is Next Cash Injection?
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Published: June 14, 2008
Our tree-hugging Vermont daughter is using her economic stimulus check to buy German-made parts to convert an old diesel Mercedes to run on bio-fuel strained from the discarded grease of a local McDonald's french frier. She figures the home-made fuel will cost about a dollar a gallon, mainly in labor.
Our New Hampshire son, with three hungry teenagers in the house, marched straight to the bank to deposit his stimulus check in an account that funds the debit card that loads up on daily groceries.
My wife and I just received our greetings from the U.S. Treasury and assume most of it will be pumped right into the gas tank of our otherwise economical Ford.
On the surface, the economic stimulus payments of $600 to $1,200 in most households won't have much of a "Wow!" effect on the nation's pocketbooks. There's little evidence we will be any more likely to loosen our purse strings for that special gift for Fathers Day.
We're overlooking two factors. Even though the car parts come from Germany, gas from OPEC and veggies from Latin America, a U.S. spending spree might just help rescue jobs somewhere along the warehousing and distribution lines. And maybe we're saving the (buck) skin of some anonymous American banker teller.
The second point, hopefully to be realized sooner rather than later, is that the stimulus check is only a down payment on more permanent tax cuts. It's an election year: expect the candidates to be outbidding each other. The rebates are only buying time.
It's not a healthy sign, though, that House Speaker Nancy Pelosi calls the $160 billion shot-in-the-arm "temporary." What's she going to say if Bush feels a second stimulus package is needed?
The hard part is answering the question, "Why did we even bother?" The impact of the similar handouts we got in 2001 was shortlived, three months if we noticed the payments at all. But, the 9/11 tragedies overshadowed Washington's energizing exercise seven years ago.
A cynical internet blogger dashed off a fairly standard reaction: "Why didn't the feds save on postage by cutting just one check and sending it to Exxon Mobil?" He may have a point: many stimulus checks will go, more or less unadulterated, into our nearest gas pump.
My own knee-jerk response is what on earth are we doing -- giving away over a billion dollars when the nation is trillions in debt? With an expensive war on, to boot. A billion dollars would otherwise buy a load of shells and body armor.
As we tally up retail sales for the month of May, they've generally increased almost three percent, double what had been predicted. Same-store sales at major discounters like Wal-Mart and Costco jumped four to five percent in the same time frame, triple the anticipated. So, some shoppers obviously like the look of the rebates!
Still, we are still trying to cope with food and fuel inflation, an unemployment surge, continued rough-going on the housing market and tighter credits. Neither Wal-Mart nor Circuit City have seen a run on big-screen plasma TVs.
Neighbors who once swore they would never be caught dead in a Wal-Mart are now buying hamburger there -- and giving the new TV a miss altogether. They're grabbing bulk bargains from where they never would set foot earlier, while it's business suffering as usual at our favorite strip mall.
The stimulus windfall may have been nice to get, but the current economic climate still dictates where and how we shop.
A regular columnist for Hernando Today, John Herbert lives in Spring Hill.
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