QUOTE(Livyjr @ May 31 2008, 04:06 PM)
THE TREASURY DEPARTMENT AND THE COMMERCE DEPARTMENT ARE USING THESE BORROWED-MONEY BUSHIAN "REBATE" CHECKS TO SCAM THE WORLD INTO THINKING THAT WE ARE MAKING MORE MONEY OUT HERE IN AMERICA THAN WE REALLY ARE ...
SINCE THIS IS BORROWED MONEY THAT WE ARE GETTING ...
WE ACTUALLY OWE IT BACK TO THE GOVERNMENT WITH INTEREST ...
WHICH DECREASES OUR OVERALL LEVEL OF PROSPERITY ...
IT DOESN'T INCREASE IT AT ALL ...
And so ...
TALK ABOUT "VOODOO ECONOMICS", ALRIGHT ...
THIS SCAM TAKES THE CAKE ...
And so ...
"Many consumers spend rebates on cost of living - Big spenders? Early rebate recipients spend stimulus checks, but often just to get by" By DAVE CARPENTER, Associated Press
Last updated: 11:22 a.m., Friday, May 30, 2008
CHICAGO -- Many Americans allowed themselves to fantasize about large-screen TVs, European vacations and other luxuries when they learned of the federal rebates they'd be getting this spring and early summer.
Or maybe -- shh, don't tell the president -- they'd pay off a credit card or set the rebate aside for a big purchase in the future, notwithstanding Washington's intentions that they pump it immediately into the flagging economy.
"It's not often you get a windfall like that that you can just stash away for something you need later," said Sara Jackson, 29, a graphic designer in Chattanooga, Tenn.
But reality has interfered, in the form of ever-climbing food bills and $4-a-gallon gasoline.
Day-to-day living costs have sopped up the checks for many other early recipients and spoiled their rebate fantasies.
Government figures released Friday showed consumer spending inched up just 0.2 percent in April, despite widespread anticipation of the stimulus payments sent out starting late in the month. Based on a small but broadly diverse group of consumers who tracked their rebate spending in detail for The Associated Press, there was no mass rush to the malls for shopping sprees after the payments started showing up in bank accounts in significant numbers in May.
The greater economic ramifications may not be seen for months.
Vanessa Church, a 49-year-old Chicagoan with six children, was grateful for the rebate but found there wasn't much left over after big payments for utilities and other basic needs were taken care of. "Things are getting tighter and tighter," she said, adding jokingly: "I'm thinking they should do this twice a year."
Brandi Dobbins, 26, and her fiance each got their $600 checks just before their May wedding on the coast of Maine.
The combined amount was spent almost instantly when their caterer called and, after asking 'Are you sitting down?', informed her that due to food inflation their bill for the wedding was jumping from $46.50 per guest to $59 -- virtually the entire $1,200.
"In the economic grand scheme of things, I'm not quite sure that's what they intended us to spend our money on -- inflation -- but that's where ours went," Dobbins said. Derek Houck, an actor in North Hollywood, Calif., planned to allow himself an indulgence or two with whatever was left of his rebate after he'd taken care of necessities.
It turned out to be more modest than he'd thought.
When his personal finance software program showed him he had a whopping 50 cents left from the $600, he still celebrated by shelling out $49.95 for a new Wii game.
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All told, 131 million households are to receive a total of $110 billion by the time the last payments are doled out in mid-July.
What people do with them will help shape the direction of the sputtering economy. The last time Washington undertook such a program to combat an economic slowdown, taxpayers got rebates of $300 or $600 in the summer and early fall of 2001.
The eight-month recession was over by November, but it's not clear how much the payouts helped.
The amount that people actually spent -- excluding saving money, investing or paying down debt -- was lower than many economists expected, although estimates vary so widely an exact total is hard to peg.
This year's program provides more money, aimed at delivering a bigger shot of adrenaline to the economy by inducing people to buy items they didn't otherwise have the cash for.
Most individual taxpayers are getting checks of up to $600, while couples receive $1,200 plus $300 for each eligible child under 17.
People earning too little to pay taxes but at least $3,000, including seniors whose only income is from Social Security, get $300 if single or $600 if a couple.
And there are no payments for the wealthy: The amount starts to phase out for those with incomes over $75,000, or $150,000 for joint filers.
Based on economists' preliminary assessments, and echoed by the AP sample group of more than two dozen people, Americans are not hesitating to spend the money -- but more for essentials than was anticipated.
It's easy to understand why: Gas prices are up more than 30 percent since the rebate check amounts were first announced and food prices are projected to increase 5 percent or more in 2008.
Joseph LaVorgna, chief U.S. economist at Deutsche Bank, thinks at least half the rebate money may go toward energy costs alone.
"It's not going to give you the bang for the buck as originally envisioned," he said.
"The odds of it having a longer-lasting impact on the economy are less."
"... People were not planning to use so much of it on energy and food." Diane Swonk, chief economist for Mesirow Financial in Chicago, also estimates that consumers will spend more than half of the rebates -- but much of it on the higher cost of living, citing evidence of a "very stressed consumer."
That would be dramatically higher than what they signaled in an Associated Press-Ipsos poll in February, when only 19 percent of respondents said they would spend their rebates.
Some 45 percent said they planned to pay off bills, 32 percent said they would save it or invest it, and 4 percent said they would donate it to charity.
Consumers in the past have tended to spend significantly more than they told pollsters they thought they would.
Swonk says economic growth won't be affected by where people spend it -- but consumer confidence will, which can influence the longer-term outlook.
Over the long haul, spending on staples won't provide the boost the government hoped for.
Millions of Americans can testify to the psychological impact of a fat check, whether or not they agreed with the idea.
"Honestly, I think it's kind of silly that the government is paying us money when it's having such a hard time paying its own bills," said Jackson.
"But shoot, who's going to turn down money when they give it to you?" ------
Some economists are now saying we will avert a recession, or at least a severe downturn.
Don't tell that to people who have seen their living standards squeezed by the markups in supermarkets and at the pump -- like Church, who's raising six children on Chicago's often hardscrabble West Side.
"We're definitely in a recession -- I can feel it," she said over a sandwich in the cramped, bustling offices of the weekly neighborhood newspaper where she is a lifestyles and religion writer.
"We get so much less for the same money."
"Milk and eggs and bread and vegetables and fruit are all very expensive."
"So the rebate was a good idea for that." Being pinched didn't prevent Church and her husband from contributing $120 of her $1,200 rebate to their church -- they tithe 10 percent of everything they earn, in good times and bad.
The rest went fast: $350 for a son's eighth-grade class trip to Washington, D.C., $345 for an end-of-winter balloon payment on their heating bill, $225 for a daughter's water-damaged cell phone and bill, $100 for their 15-year-old son's savings account and $60 on transit passes.
Another $600 is expected later -- her husband filed separately -- and living costs are likely to gobble up the bulk of that, too.
Church, who describes herself on a networking Web site as "a certifiable, bona fide bibliophile and the proud owner of over 5,000 books," might have liked to make a few additions to her library or spend something on herself.
Not at times like this, she can't.
But she's not complaining about a payment she sees as a blessing.
"I don't know how it affected other people's budgets overall, but it helped our money stretch," she said.
"I thought it was a really cool thing."
"It made me see my president in a different light."
"I was like, 'Attaboy George!'"
"I can be swayed, I can be bought!" ------
The rebate couldn't have come at a more perfect time for Dobbins and her fiance: just when payments for their wedding were coming due.
Every penny was devoted to the big event, which will have cost about $24,000 by the time all the bills have been settled.
"When I learned about the tax payment I was thrilled," said Dobbins, an account supervisor for a marketing firm in Washington, D.C.
"I immediately factored that into what we would be able to pay off."
The fact that the entire amount was consumed by food inflation, in the form of their caterer's price hike, was appropriately ironic given the backdrop to today's economic malaise.
"Do I think it accomplished what they wanted?" Dobbins said of the rebate.
"No, because it's going into people's gas tanks, into their food bills or to pay off their credit cards."
"The cost of living is going up so fast that it's really not going into the stores."
"It's just keeping up with everyday costs." ------
The most troubling economic indicator to Houck this year has been the cash flow predictor in his Microsoft Money software, showing his finances going "down, down, down, down, down."
So when the $600 rebate appeared in his bank account, it allowed the 24-year-old to splurge a little for the first time in months.
Splurging is relative for an actor-for-hire doing everything from carpentry to backstage lighting work to video game bug-testing in order to pay the rent.
Besides $30 on tickets to see a play a friend was in, his big "fun" purchase was the Wii game -- "Super Smash Bros. Brawl."
He allowed those indulgences only after spending $245 on new head shots to get his face and name out to directors, $68 to renew his subscription to an acting submission service, and most of the rest on food, gas, laundry and bills.
"I don't think I helped save the economy with my contributions from the rebate, but it worked well for me," said Houck.
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Angela Anderson, 50, of York, Pa., thought for weeks about how she might spend her tax rebate.
She could create a gas account for the increased cost of her 54-mile daily commute, pay off credit-card debt, buy a piece of local original art, put some toward a trip to Europe, and maybe use anything left over to treat herself with a massage and manicure.
Alas, when the money showed up it was less than expected at $300, owing to the fact that she was unemployed for much of last year.
So by the time she wrote two $250 checks to her son Michael and her daughter Jenna to support them on unpaid college internships, it was more than gone.
Despite the disappointment, she was thankful.
"Anything I can do to set a couple of bucks aside so I can pay for the increased cost of living, I'm grateful," said Anderson, public relations director for an art school.
"As a single parent, earning just a bit over $50,000, things are always tight for me."
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Hung Nguyen is one of those who dreamt of a fancy new TV and got it, thanks to his payment.
The 26-year-old New Orleans resident spent his $600 stimulus check the same day he received it on a 32-inch plasma television for the bargain price of $400, using the rest to pay credit-card bills.
Nguyen, who works for the Federal Emergency Management Agency, lives with his parents and lost everything in Hurricane Katrina.
They have since rebuilt, and he felt secure enough financially to spend the rebate on something that wasn't a necessity.
"I guess I kind of just spent it as it was intended for, to boost the economy," he said.
For three years, he drove a car with no air-conditioning -- a major sacrifice in the sticky-hot South.
Now he finally feels he has a good job and can buy things he wants, not just needs.
While Nguyen doesn't consider himself overly thrifty, he didn't start out intending to buy a TV.
Initially, he thought he'd buy himself new glasses and pay off bills.
But his brother saw the TV at a store and Nguyen thought 'Why not?'
"It was worth it," he said.
"The picture is awesome."
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Moderately affluent Americans, too, are showing increasing signs of economic strain.
Swonk says more and more households are shopping for groceries at big-box retailers rather than their local grocer, not going out to movies as often, or watching regular TV instead of rented DVDs or on-demand movies.
Chuck Gutman, 40, who lives in the well-off Chicago suburb of Lincolnshire, Ill., says he feels an underlying financial security but finds himself facing tougher decisions with his money.
"It's a constant battle," he said of rising costs.
"I like leading the good life -- going to plays, concerts, restaurants -- but it's harder."
Gutman, who teaches English as a second language at a heavily Hispanic high school, didn't let the increasing money squeeze prevent him from spending his rebate on his passion: helping prepare students from disadvantaged communities to go to college.
The $600 paid for a large portion of a summer tour of colleges where he will meet with admissions counselors who may be in a position to assist his students.
"I got into teaching as a vehicle to salve my desire for making a difference," he said.
"Helping these students is really satisfying."
"Just seeing the spark in their eyes makes it worthwhile."
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Gene Murray also demonstrated the high value he places on education with his family's rebate money.
He came up with an interesting twist for his son's 15th birthday in May: He used the $300 dependent stipend to open a bank card account for him as a gift.
"I thought it was a good way to teach him how to be responsible," said Murray, 55, an instructor of information security at a technical institute outside Denver.
"He can go online and look at his account balance and see his transactions."
Future allowance money for Patrick also will go into the account.
"He's a saver," Murray said of his son.
"He will get money and it will sit around six or eight months and he'll save up and get something substantial."
Murray and his wife, Angie, 49, both are pursuing additional college degrees for themselves.
They banked the rest of their economic stimulus check, worth $1,200, with the expectation that some will go for their tuition.
He said he wasn't going out of his way to specifically spend the rebate money, but "I'm sure that it'll be useful."
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For Mark and Toni Quero of Northfield, Vt., the rebates -- $1,200 total -- went straight into the bank, to be saved for home heating oil and replacing a picture window in their home to make it more efficient. Quero and her husband earn about $44,000 a year between his job as a maintenance man at Norwich University and her Social Security disability checks.
They debated using the money for a vacation but decided instead to use it on heating oil for their three-bedroom ranch house, which they share with their 28-year-old daughter.
So they're holding $1,000 for oil and $200 for the picture window replacement.
The couple spent $800 on heating oil last winter, up from $600 the year before, and they expect it'll be higher this year.
"Mark said 'Maybe we'll take part of it and go on a nice vacation,'" said Toni Quero, 59.
"Then we said 'That's silly.'"
'We'll regret it because we'll wish we'd saved it for fuel.'" ------
Another saver, Miami native Gani Rodriguez, 24, received her tax rebate check May 9 and immediately deposited it into her savings account.
She and her boyfriend have been squirreling money away for the last year and a half to buy a house together.
"We're already shopping for rings," said Rodriguez, a purchasing agent at an interior design firm.
"So if all goes well, we'll do it at the same time -- the house and the marriage."
Asked if she felt any responsibility to spend the money to help jump-start the economy, Rodriguez demurred.
"It's our money."
"I can do with it what I want," she said.
"It could help to spend it, but I don't think anything big is going to change as far as (my spending for) food and gas."
"This is really chump change." ------
Associated Press writers Becky Bohrer in New Orleans; John Curran in Montpelier, Vermont; Sandy Shore in Denver and Laura Wides-Munoz in Miami contributed to this report.
