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Second Stimulus Check For Obama 2009 Economic Stimulus Package?

Published 2/4/09 (Modified 3/9/11)
By MoneyBlueBook

Tax Cuts, Social Spending, and New Jobs - But What About Stimulus Checks?

A second economic stimulus package for 2009 is on the way and from the looks of things in the news, it appears newly minted President Barack H. Obama and his Democrat controlled House of Representatives and U.S. Senate are determined to ram the lucrative spending proposals through the legislative meat grinder no matter what, much to the chagrin of skeptical and deficit-weary Congressional Republicans.

As Congress debates the wisdom and intricate details of the current version of the 2009 economic stimulus package, it's clear that something needs to be done very soon to jumpstart and save our suffering economy before we spiral into a full blown economic depression. The unemployment rate is rising fast and everywhere you turn, there seems to be a never ending stream of unemployment and layoff news being announced everyday. The stock market has already shed more than half of its value since its peak in 2007, and billions to trillions of dollars worth of wealth have already been eliminated from the economy. Major banks and financial giants like Citibank, Bank of America, and JP Morgan Chase, once the financial pillars of our economy and the lifeblood of our credit industry, are now clinging onto U.S. government bailout money for dear life - hoping to still be in business at the end of every quarter.

With its almost limitless resources, it's clear the federal government must intervene somehow and put this broken economy and financial system back on track to prosperity. But the question is - what should be the government's role in all of this? More specially, what method should the government take to effectively jump start the economy to life again and ease the suffering on Main Street and Wall Street? Should the 2nd economic stimulus package continue to focus directly on sparking consumer spending by featuring a second round of free stimulus checks to consumers - perhaps for amounts much higher than the previous 2008 economic stimulus checks? Or should the plan this time around focus more on longer term indirect measures like job creation, infrastructure investment, and tax credits?

Current 2009 Economic Stimulus Package Focuses Less On Stimulus Checks - And More On Job Creation, Infrastructure Projects, and Tax Cuts

Before Barack Obama was elected president and during his 2008 Presidential election campaign, he supported implementing additional economic stimulus measures in 2009 - and even whispered at the rumored possibility of a second round of stimulus checks for taxpaying consumers in 2009 before tax day.

Whether a second stimulus check was a real possibility or not, the mere mention of a second round of stimulus payments and the prospect of getting more free government money certainly made my greedy ears perk up, but much of my optimism and enthusiasm were quickly dashed when Obama finally came into power. Almost immediately, he signaled a different stimulus proposal shift that favored a more multi-pronged approach of using tax cuts, tax credits, and pet projects, rather than relying on the 2008 economic stimulus check tactics of his predecessor, George W. Bush. Instead of just distributing free bailout money to the masses and hoping the funds will naturally trigger a huge surge in consumer spending activity to put the economy back on its feet again, Obama's stimulus package focuses more on middle class tax cuts and massive increases in government spending to fund various infrastructure investments, green energy projects, financial aid to states, and social education initiatives - designed to create jobs and put people back to work.

The current 2nd economic stimulus plan laid down by President Obama for 2009 is a whopping, super-sized $825 billion economic rescue package containing staggering spending initiatives and ambitious tax cuts, and sprinkled with dozens of pork-based proposals and suspect social initiatives within hundreds of pages of legislation. The current package contains $300 billion worth of aggressive construction projects designed to improve the country's���� infrastructure and create millions of new artificially generated jobs in areas like health care, renewable green energy, school upgrades and repairs, and transportation related improvements. The package also contains about $200 billion worth of state social assistance provisions designed to help keep state sponsored health and unemployment programs well funded - to offer a measure of cushion for those people who have been recently laid off due to the economic down turn. Along with the state assistance portion are other safety net type provisions to help fund and keep afloat local food stamp programs, food banks, state sponsored health care, and governmental health insurance plans for those suddenly unemployed.

The other primary feature of the current Obama economic stimulus plan is the series of tax cuts and tax credits offered to qualifying individuals and small businesses. Under the tax cut portion of the stimulus deal, small businesses suffering losses because of the economic downturn and recession would receive more favorable tax loss write off terms.

For individuals, the current 2009 economic stimulus package offers pretty generous tax cutting proposals. The plan highly favors low and middle-income working families since the idea is that these income groups are more likely to spend and invest their tax savings rather than save the money. In terms of stimulating the economy, increased consumer spending is good, and consumer saving is bad. Nicknamed the "Make Work Pay Credit" by President Obama, the proposed tax credit is supposed to reach close to 95% of workers, and benefit even working tax filers without any tax liability - typically very low income workers. Here is a basic overview of the stimulus plan's Make Work Pay Credit:

  • Middle Class Tax Credit: Under the plan, there would be a tax cut amounting to $500 a year for individuals, and $1,000 for couples. The economic stimulus would be issued in the form of a tax credit, and would be limited to those making $75,000 or less ($150,000 or less for married workers filing joint tax returns).
  • Low Income Tax Credit: For low income taxpayers, there would be an increase and expansion of the Earned Income Tax Credit to provide a refundable tax credit for low income assistance. The expansion would affect even working tax filers without any actual net tax liability - typically very low-income workers - and allow them to potentially qualify for free stimulus tax refund credits.
  • Child Tax Credit: For those who have children, a temporary increase in the child tax credit would result in larger tax refunds.

Should The 2009 Economic Stimulus Plan Be Re-Written Or Re-Packaged To Contain Major Provisions For A Second Economic Stimulus Check?

It's too bad the eventual 2009 stimulus plan probably won't contain another round of hefty stimulus check payments to ordinary consumers like the ones that were dished out last year. While the 2008 stimulus tax rebate wasn't much (only a few hundred dollars in my case), some additional government handouts in higher dollar denominations would still have been greatly appreciated by individuals like myself and put to good use. Plus, as an American consumer who embraces the virtues of capitalism, I feel I would have made a better decision for myself as to how best spend my portion of the stimulus money pursuant to what's in my own best capitalist self interest.

Overall, I think President Obama's administration is probably right in its revised efforts to focus more on job creation, offering greater tax cuts, and enhancing safety net protections to help suffering Americans survive the economic downturn for the long term. Offering greater financial assistance to struggling state unemployment programs (many on them on the verge of running out of funds), and stimulating growth with more job building projects is a proven way to stabilize the markets and improve consumer sentiment. However, I'm still a bit disappointed that the President and Congress have not explored the prospect of an enhanced second stimulus check further.

At least for now, President Obama's administration seems to have given up on the idea of using government stimulus checks en masse again to jump start the economy. Instead, Obama's advisers have indicated that they would prefer searching for viable ways to get government stimulus money into the hands of American taxpayers quickly that would not require or duplicate the tax rebate checks of last year. Apparently the $150 billion spent in 2008 in the form of stimulus payments to consumers proved to be quite an economic failure and pointless exercise of futility in terms of actually stimulating the economy to any extended degree. But perhaps the reason it didn't work properly the first time around was because too little money was given out to substantially change consumer spending habits to forcibly inject money back into the economy again (simply compare the $150 billion spent last year to the $800 billion-plus worth of spending being proposed for 2009).

Perhaps The Problem With The First Stimulus Checks In 2008 Was That They Were Too Little To Make Much Of An Impact

I have mixed feelings about the prospect of yet another around of direct stimulus checks to consumers. On one hand, I understand that there are many struggling American families getting hammered by higher living���� costs, and suffering from the ills of unemployment and layoffs. However, I'm not entirely convinced that the idea of handing out free money to families will really solve all of our economic woes and jump start the economy at its core. But yet I still wonder if perhaps we gave up on the idea of stimulus checks too early and that maybe, the concept is still workable. Maybe the amounts issued in 2008 were simply to small to change anyone's spending habits as initially intended - after all, only about $150 billion was spent in 2008, when the current 2009 economic stimulus proposal's already ballooned to a whopping $850 billion.

I know when I received my tax rebate stimulus check in early 2008, the check only amounted to a few hundred paltry dollars - not really enough for me to go on a greedy spending spree. So instead of spending it and doing my part to stimulate the economy, I ended up doing what most people probably ended up doing with their tax rebate check - putting the money in a bank and depositing it into a high yield savings account. Of course, my plans for the money would likely have been very different if the amount wasn't something low like $300, $600, or $1,200, but rather something as high as $10,000. If the stimulus check issued to me was indeed worth upwards of $10,000, I would very likely have saved a small portion of it but ended up plowing a sizable portion back into the economy by spending it on major expenditures like a new wide screen plasma TV set, new home appliances, or even a new car.

What If The Entire Economic Stimulus Bailout Package Went Towards 2nd Stimulus Check Payments? Would This Actually Stimulate The Economy?

Almost all polls among ordinary American consumers show overwhelming support for a second stimulus rebate check. After all, who would really oppose it? Who would be opposed to receiving free stimulus check money. Think the prospect of getting a second stimulus check worth as high as $10,000 as a consumer bailout is impossible? Well it's probably unlikely, but it's not out of the realm of financial or budgetary possibility, at least based on the fiscal numbers alone.

On CNN Money, a very interesting question was proposed in regards to the bank bailout and economic stimulus packages. If instead of bailing out these credit crisis-stricken banks (who probably deserve their fates due to the risky mortgage bets they greedily placed into subprime loans), we just gave all of the bailout money to taxpayers in the form of a massive consumer cash stimulus. How much would we each get if the entire current economic stimulus proposals were issued out to consumers as a second round of stimulus check payments? The second important question to ask is - would this actually stimulate the economy for the necessary extended period of time to get it going again?

To arrive at the figure, CNN Money took the total amount of the bank bailout package of $700 billion and added that to the proposed 2009 economic stimulus spending estimation at the time of $819 billion - resulting in a total bailout package of $1.519 trillion (that is quite a staggering figure). Dividing that number by 156.3 million, the total number of U.S. workers who filed federal income tax returns in 2008, that number equaled $9,718.49 per U.S. taxpayer, or roughly the equivalent of a juicy $10,000 cash bailout payment for each qualified tax payer. Now that's stimulus with oomph! With $10,000 in our pockets in the form of instant windfall economic stimulus checks, it's very likely that the tremendously high amount would be sufficient to incite a major change in spending activity than a measly $600 check ever could.���� People would probably go out and actually start stimulating the economy by buying cars, purchasing TV's, paying for college studies, and going on vacations.

As a dose of devil's advocate inspired reality though, while it's very possible that $10,000 checks in every working taxpayer's hands would probably send the economy skyrocketing, it's also possible the growth could be short lived and not actually get to the true root of our current economic problems. The massive surge in consumer spending probably won't do much to solve the lingering fundamental issues surrounding our current credit crisis, which centers around a failed banking system and a failed home mortgage lending market. But then if repairing the banks and injecting confidence back into our home mortgage and credit lending markets are our primary objectives - I'm not sure the current economic stimulus proposals by President Obama, which are focused more on tax cuts and job creation and most prominently, aggressive social spending programs - will actually accomplish those goals. At least for stimulus checks, they could be able to help alleviate some of the immediate economic suffering being felt by ordinary consumers - many of whom are fighting to stay alive, with a great deal currently resorting to desperate emergency fund measures like 0% credit card offers, balance transfers, and risky high interest payday loans.

I'm curious as to everyone's opinion on the wisdom of a second stimulus check (if it ever happened). What's your take? Would substantially higher stimulus checks of $1,000, or possibly even as high as $10,000, actually encourage you to spend the money (thereby stimulating the economy) instead of merely saving the amount or using it to pay down debt? How would your decision compare to how you actually spent your previous 2008 tax rebate stimulus check?

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392 Responses to “Second Stimulus Check For Obama 2009 Economic Stimulus Package?” 

  1. Jennifer says:

    I also have to say it is not going to do me any good what obama recently did. i can't buy a house, i can't buy a car. i can't afford it. my credit is up a creek as well as my husbands because hey it is not a class in school to teach about credit and how to manage it. but hey i am going out of debt because of dave ramesy. isn't he great. we are tight but starting to get managable now if my husband could get back to work it would stay that way. but hey again my husband is one out of millions that got laid off. i already bought my house and caught it up but i will not recieve the 8,000 dollars because i can't buy a new home. i had to give up my economy van for a van that gets 14 miles to a gallon but i don't have a $400 dollar a month payment. I am continueing to hardly make ends meet as in the house paid. The lovely mortgage company said they were supposed to bring the percentage rates down. well let me ask why does it go from 6.5% to 6 percent than. like a whole $15 dollars is going to make a difference. is it not just amazing they are stuggling but they will milk you more and more when you don't have income comming in. as i said we need to move. for the children as well as maybe just maybe my husband could get a job somewhere else. sure is not anything in new mexico everything is taken or laying off. what are we all supposed to do? obama i say give us the cash to help even if it is a temporary fix. maybe give some to each of those small companies to hire people they need to make it. i am almost debt free i have no reason to spend it on debt. LOL. Again dave ramesy is great. love it.....

  2. Celeste says:

    A new stimulus payment may not be so good for me, although I did appreciate it last year and I spent it instaed of saving it. I didn't know that I would be penalized in my 2008 income tax. Penalized I say because the government took or deducted that from my return. Am I the only one who had to pay it back via tax return or are there others out there who got the pinch also?

  3. Betty says:

    Funny, they say the stimulus checks last year were FREE? Hmmm... when I just did my taxes for last year it asked what I received for that stimulus check and I watched my tax return (that I worked damn hard for) go down $600 which is the exact amount I received last year... how is that FREE?????? Seems more like an advance to me.

  4. Cyn says:

    God Bless all of you those who are struggling and those who are staying a float in these tough times. I am a single mother of three. Working hard and just praying the future will be brighter for my sons. All I can say is to pray and keep working hard.
    I believe faith will make things better in time. NOT MONEY!!! Sadly we need it to survive but what we all need to do is search our minds for what is truely important.
    When we are gone it will not matter what kind of car, home, or other material item we owned. God Bless and I hope for a better future as well.

  5. super_psycho_mom says:

    Jennifer --
    Bless you! My husband and I are on Baby Step 2! We often laugh about how Dave should write "Financial Peace -- The Congressional Edition".

  6. day 2 day says:

    a $10,000 stimulus check! wow! that would be great! yes i want it, and would stimulate the heck out of the economy, a new car , catch up on bills, fix up the house, i could go on and on. all excitement put aside, it would be great for the economy. let's do that first to help the unemployed, i mean if i were unemployed $10,000 would greatly be appreciated. it's not much when you don't have a steady paycheck, but it's a start, when having to start over. let's all say, YES WE CAN! YES WILL! AND THEN BE ABLE TO SAY, YES WE DID!

  7. Verdetta says:

    A stimulus check would do me wonders right now...but of course everyone would not put their money into the economy...so why not give everyone a stimulous check and a gift card that can only be used to purchase something...if Pres. Obama would give out at least $5,000 checks with $1,000-$1,500 of it on a gift card...I think it would help the economy...you would have no choice to use the gift card...who doesn't love to shop...they gave gift card to the victims of Katrina and they spent them...

  8. Darlene says:

    We are so proud of everything you are doing.....we have heard from alot of other friends we are getting stimulus check from 2009 economic package is this possible too? Thank you for all you are doing for this wonderful country...I'am 60 years old and work as a sub- school cook, my husband is 62 years old and works as a PE Teacher ...again GOD BLESS you and GOD BLESS USA AND OUR WORLD.

  9. Carl says:

    Last Year's Stimulus was actually a reduction on 2008 taxes, and yes the checks then were an advance of the extra refund you would normal receive. Everyone was so excited about the checks that the news of really just being an advance was not noticed.

    So someone smarter than me could correct me, I but think all of our taxes are actually going up that amount this year as that was a 1 year deal. Except for the small withholding change we shall now see.

  10. mouse man says:

    I feel like we need another stimulus check of a sizeable amount.I recently had to quit work from a job that I had worked for 30 years because of health problems.Not long after I started drawing long term dissability the company filled bankruptcy.Thanks to our wonderful govt however the company under certain conditions continue to operate,but because of this I lost my dissability payments. I now draw medicare dissability which is about half of what I was drawing. The company my wife works for has just built a new plant in mexico and has started sending a lot of their orders there,although management says what they are sending there does not effect their work here so I guess that would not have anything to do with her not getting to work nearly as much as she has in the last fifthteen years on the same job. The economy would improve on its own if the govt would penalize companies sending our jobs to foriegn countries and put such a large tax on products being shipped into the U.S. that it would not bennefit these companies to do so. I also think that the govt should make a hell of a lot more effort to remove illegal immigrants from our country freeing up more jobs for U.S. tax paying citizens. Instead all you hear on the news is how many illegals are in the country,I thought illegal meant against the law. I know a lot of people are going to say the only jobs they are taking are the jobs no one else wants,Horse hockey. Iknow of people who worked in housing contruction that can not find work because the illegals are willing to work for a lot less and they can afford to do so since they live 12 to 15 in one house. So again I say yes I would love to have a stimulus check but in long term I feel that doing the things I mentioned would help the economy and make living conditions in this country a whole lot better.

  11. Unbelieveable! says:

    I love it! A $10,000 stimulus check for everyone would do nothing put push this economy further under. Yes everyone could use it, pay bills, debt, medical expenses, etc. but that goes to show that the forest is block your view of the trees. The big problem is the dollar isn't worth what it was a few years ago. In 2002 everybody was buying houses, they were cheap, interest rates were down, the country was at war, and the economy was booming. Then the market changed and lenders said, if you cant afford this house we will set up a balloon payment. Yes we know that your family makes 50k a year, but the way that houses are selling and appreciating in value we can finance this $300,000.00 on a 6 year note at 5% and in 6 years you can sell it and double your money. Great idea, NOT! So many people fell into this trap that when the 6 year notes became due the market flooded with homes that people couldn't afford. Now those banks (poor guys) are going under, but not after foreclosing on homes and putting people on the street.Now that same home has depreciated in value to the point that a lot of people are still going to owe $100,00.00 or more after those homes are auctioned off. I know that our local bank is letting people stay in their homes and they have stopped foreclosures as long as the people agree to pay the taxes and utilities, with the promise that the people will pick back up on the notes when the economy picks up. I sounded cruel in my pervious postings but I really didn't want to come across that way. But I feel that SOME not ALL of the people on here are the same people that sit around with their hands stuck out waiting for someone to give them something. I worked hard, went to school, graduated, and I don't think that the Government should take over utilities, banking, etc. That is called Communism.

  12. Bruce J says:

    i am really offended that we tax payers and so called majority lower middle class workers will not recieve a stimulus check immediatly of any sum! we tax payers will pay off the debt at estimates of 7500.00 per tax payer and only recieve a tax credit in the future. i feel you have already let down the mass that elected you and still the rich only suffer how ever! try week to week or day to day. tell the ones you love NO NO NO we cant afford to go to the movies, drive the car for a ride to the lake( need gas for work) i think you have the just of it!!! our families need help now not as a tax credit but in as much money as you can give right now. for love of country let the rich help support us give all the extra, 2nd house ,vacations,cars,ect. live like us to help out!!!! be the patriot and GOD BLESS YOU ALL!

  13. Mary says:

    Let he who is without sin, cast the first stone.....

  14. shirley says:

    Im disabled on a fixed low income i feel we should get a second stimulus check if they can help the foreign people give them 10,000 to come here and get free housing no taxes i worked hard to in a stand up factory job at 5.15 and hour standing on cement i now have a lot of neck and back problems yes i would like a second stimulus check and please help all the elderly people who worked their lives too . I feel sorry for them. I used to hear my mom say we paid taxes all our lives and we old now and still paying school taxes we paid when you kids were in school were old now and still paying . Give the elderly a break they need a second stimulus check too just not the banks and car companies . We all need help through this hard economy times. Thanks Shirley age 65

  15. shirley says:

    I forgot i also feel like the foreign people who come here get jobs and americans are laid off while they keep them working. My shop did this we had more time there they maybe 6 months laid us off kept them because they get a tax break with them us we mean nothing in this country it seems. all the jobs are going to other countrys and no good jobs here this isnt right . Something is wrong but i feel Obama is doing good so far i hope he sees that we get a secong stimulus check to help ua all out. This is AMERICA let us feel proud to be Americans.

  16. Wayne says:

    I would like to see some thought given to each household making less then $150 thousand per year that they recieve a $20 thousand voucher. With the voucher they would be able to use so much of it to use as a down payment on a new car, or to redo the terms on your home, or to be put against existing bills, credit card bills etc. If you do not use the vouchers for the intended purpose then the voucher cannot and will not be honored. I would think that if families were able to use this money to pay off existing debt that this too would help stimuluate as well. After using the vouchers, I feel families would feel that they could possibly spen their weekly earnings daily as needed and not stop the spending entirely.

    Many people are afraid to spend as they are uncertain what tomorrow will bring. I think along with this each family should then be limited to a visa, a mastercard, and maybe a couple store cards like Sear's and another to be able to purchace household items when they become necessary for a family. After what we have been going through I feel many families better evaluate their purchases then before this recission/depression.

    I know myself I would buy only what is needed and not my wants, just my needs.

    Thank you for this opportunity to express myself.

    Wayne and wife Janet in Kansas

  17. hollyinmichigan says:

    I just did my taxes for 2008...they deducted the money my ex got for me. So this is twice now that I didn't receive my stimulus....Isn't that something? I got booted again. Guess I'll go work for my lousy $25 a day. I believe it's all about money. Gm lost 6.9 billion in the last quarter. Guess that means more lay-offs for Michigan. It's only going to get worse before it gets better. I am looking for a job out of state. Its too bad I have to leave everything I know just to be a tax paying American citizen. It makes me sick.

  18. Tammy Winters says:

    I think this Is ridicolus that they say tax payers should get a higher stimulus check and people that dont work that receives social security wont get a check. I think the people In poverty should get the most money. They actually might be able to go out and spend money on things to boost the economic situation. Me and my daughter received 300.00 dollars. I think we should have received a lot more. I pay taxes to. I have property taxes, and every time I buy groceries I pay taxes. Dosent this matter at all. I am a single mother with 2 mortgages and bills I pay taxes on. My son has major heath problems and they took his medicaid. This Is like leaveing people with less money In the dirt. I am on social security and disability sick and struggling. I dont think It would be far to anybody to be left out. All except the people that make a ton of money. If I dont receive my stimulus check this year I will appeal It. And not to mention that a lot of people are talking about picketing. We were told that we were getting a secound check and now there trying to change It. We sould have the right to decide If we want our check or donate It tords what there talking about. I will say that I am very unhappy about this.

  19. Mike says:

    Most people are missing the point of the main article here. The idea is... why are we giving hundreds of billions of dollars to the companies that handed out mortgages like free temporary tattoos in a cereal box, and also carpet-bombed America with credit card offers for anyone with a mailbox?

    My thoughts on all of this is, if the govt feels the need to pump money at the problem, then make it as deep reaching as possible. Give it to the TAX PAYERS, so they can use it to pay their past due mortgages and credit card bills, and the rest of the bills we all have. The banks will still ultimately end up with the money anyways, so why not?

    If I had $10K right now. I would pay a couple months worth of my mortgage, pay down my credit card, and pay off my medical bills. Do you think that might allow me to use my paycheck for some other things like maybe a better car, or an appliance, or groceries?

    Thanks.

  20. Tmaster says:

    To all of you who voted for OBAMA! Shame on you! This guy is only thinking about those that don't work, and will take from us that do work! If someone makes money, they lose out, if you lost your job, or just to lazy to get a job, we who work will support you until we fall into a category of non worker, then the whole country will be screwed! He has no heart <3 to take the elderly's medicare, and lessen it to give more to the unemployed! Man is a whack job.. Please think long and hard about your vote for next election! Vote for Mickey Mouse over this guy

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