Faulty Logic For Economic Stimulus

Today President Bush shed some light on how the government plans to artificially stimulate the economy.

The President said he's looking for "direct and rapid tax relief" for both consumers and businesses. To achieve this, he plans on implementing an income tax rebate of between $300 and $600 per person, and depending on your circumstances, your rebate may be even bigger.

The white house is looking for a repeat performance from the plan implemented in 2001. It seemed to work back then, however I think the direct effect was a bit over inflated.

But this time it's different.

We've got a different situation this time, with different economic pitfalls pushing the health of the economy down the tubes.

Housing is in the dumps, the stock market is sinking, interest rates are going down, and we've still got a credit "crisis" that I feel is under-reported and misunderstood.

The only way distributing an income tax rebate will work to stimulate the economy is if you turn around and spend your rebate. So the question really lies with the American tax payer. What will you do with a tax rebate?

Considering the credit crisis, the mortgage default rate, high energy prices, and the overall increase in consumer staples (like groceries, household goods, etc), I suspect that instead of stimulating the economy by going to Best Buy to buy that big screen TV you've always wanted, most people will use it to catch up on their mortgage payments, pay off the credit card, or help pay for gasoline or higher utility bills.

In no way will using this money to dig yourself out of debt help to stimulate the economy.

So the question lies with you.

If the government were to give you a check for $600 right now, what would you do with it?