The White House and congress have agreed to issue tax rebate checks to people who earned less than $75,000 as individuals or $150,000 as couples. Individual filers will get up to $600 and couples $1200. The checks could go out beginning in June.
Will this extra cash have a big impact on the economy? Probably not. More likely people will have a kind of Christmas in June attitude toward the windfall and buy goodies like iPods, iPhones, video games and the like. New homes and cars probably wont be on the wish list.
So was it a good idea or is it a waste of time? I think it was a good thing on two fronts. One, any time the government gives individuals their money back it's going to go to better use than if they had kept it. An iPod is a better purchase than a $400 toilet seat or a $3500 office chair. Second, it may keep the government from doing something far more damaging. Big spending programs and new legislation as a kneejerk reaction to an economic slowdown could hurt the economy for years or decades. If Congress and the White House can now feel like they've done something and let the market work this out, so much the better.