I am excitedly awaiting my economic stimulus check. Like most middle class Americans I’ve felt the squeeze this year. I’ve been trying to figure out the most effective way I can stimulate the economy with this tax rebate? I assume the intent is to increase spending in the American economy. So the question becomes what can you get for $1,200 these days?
I have 2 Daughters who are both learning to drive and they’ll both be getting their licenses this spring. Every time I take them in the car to practice driving they ask
“Can I have your car when I get my license Dad?”
I’d love to give them my car; unfortunately, I never said the family can afford another car. It would be awesome if the check from the government covered the cost of another car, but it won’t even cover the increase in my insurance from adding 2 teenagers to my policy let alone pay for another car. So much for stimulating the local used car economy.
Another big expense coming up in my household is college. Both of my daughters are college bound and will be in college simultaneously. What better way to stimulate the economy and my daughter’s brains than to spend the stimulus check on college tuition. As you can imagine, I’ve been checking into the price of colleges lately. According to the U.S. Department of Education private 4-year universities in Connecticut cost on the average $34K per year and Connecticut’s 4-year public colleges cost on the average $15K per year. $1,200 doesn’t put a dent into that cost either. By the way, children over 17 aren’t eligible for the additional $300 credit, so this won’t help my oldest child with her college tuition anyway. I’ll have to keep looking for other ways to stimulate the economy.
I know the single biggest cost increase I’ve experienced this year was in gasoline and home heating oil. I talk to my friends and neighbors and they all have experienced the pinch this year. The higher cost of gasoline at the pump and home heating oil has been their number one unexpected expense this year. According to the U.S. Department of Transportation, the average retail price per gallon of gasoline in March 2001 in Connecticut was $1.46. The average gas price per gallon as of March 11, 2008 is $3.32. When adjusted for inflation, this represents an increase of 93 percent.
Home heating costs have risen by 22 percent per household from $1,336 to $1,635 in the past year according to the U.S. Department of Energy.
Personally, I’ve spent almost twice what I did last year on fuel oil because I did not lock in on the relatively low summertime rates. I cringe every time Dr. Mel says
“Pin Point Doppler calls for another record cold day.”
My daughter has been after me all winter,
“Dad can I turn the heat up?”
Just because she actually is my baby doesn’t mean she has to act like one.
“No. Put on another sweater.” I reply.
After much consternation I finally have decided to spend my stimulus check on fuel oil, a tank of home heating oil cost almost $1,200 dollars anyway.
But will this help pull our economy out of a recession or stimulate the American economy? I doubt it. What it will do is reward OPEC for keeping crude production low and further increasing the trade deficit. I know people who went to Dubai on business recently. They came back telling me stories of gold plated fixtures in their hotels and skiing. That’s right; they’ve built a ski slope in the middle of the dessert. So whose economy will reap the benefits of this stimulus check?
The money for the stimulus package is to be borrowed and would increase the federal deficit. I question the soundness of this plan. When the economy is experiencing a recession and you find yourself overextended, should you take out another loan?
Bernard Baumohl, managing director of the Economic Outlook Group, cautioned: “Practically speaking, this plan is not expected to have any meaningful impact on the economy until much later this year, perhaps in the fourth quarter. Even then, it’s unlikely we’ll see more than an extra blip in GDP growth.”
In an effort to quell a chain reaction on Wall Street, the Federal Reserve has taken action unprecedented since the Great Depression by lending money directly to a major investment bank, Bear Stearns, why shouldn’t they help out the average tax payer as well? The only problem is, when I say “The Federal Reserve” that really translates into “The Taxpayer”. This action has put the taxpayers on the hook for billions of dollars in questionable trades. Should we bail out a company that made bad decisions?
Hopefully The Fed’s actions will reassure investors and stabilize the market. Maybe the tax rebate plan will help the average person and will stimulate the American economy as planned. As for me and my tax rebate, I better buy a tank of oil before I can’t even afford that!