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Stimulus Plan Could Help Local Businesses, People

Posted January 25, 2008

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— Local businesses and individuals could have their bottom lines pumped up by an economic stimulus plan proposed Thursday by Congressional leaders and the White House, economists say.

Mike Walden, an economics professor at North Carolina State University, said the stimulus package could ease the weight of a slow-down or recession in the economy, but is no panacea for either the country or the region's economic ailments.

"It will relieve some of the pain, but it's not going to get rid of all the pain," Walden said.

Most of the economic pain felt locally comes from the troubled housing market. In 2007, nearly 4,000 Wake County homeowners went into foreclosure – up 15 percent from 2006.

To address the mortgage crisis, the package would raise the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas.

Most of the $150 billion package, though, would be aimed at getting consumers to spend money, Walden said. About $100 billion would be set aside for tax rebates to approximately 117 million families, while the remainder would go to tax cuts for businesses.

Individuals who pay income taxes would get up to $600 and working couples $1,200, plus an extra $300 per child. Workers who make at least $3,000 but do not pay taxes would get $300 rebates. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates.

"If they are spending money at shops and so forth, that means businesses will do better and will be less likely to lay off workers," Walden said.

However, the proposal contrasts what a short-term good for the economy and a long-term good for individual households would be, Walden added. Historically, most people spend about 30 percent of extra tax rebates and save the rest.

"For many families, it probably would actually be better if they don't spend the money," he said. "They should pay off credit card bills, pay down on debt."

Some local businesses said they hope that once the checks arrive in the mail, individuals will do what the federal government believes is good for the national economy.

All Pro Nutrition Shop opened in a good location on Raleigh's busy Glenwood South, but six months later, business remains extremely slow. Some days the store rings up only $50, store clerk Jody Coles said.

"A small business like this isn't going to be around anymore if we don't get customers coming in and driving up the sales," Coles said.

Overall, the Triangle's economy is in good condition, usually placed on a number of lists of top places to do business, Walden said.

U.S. House Speaker Nancy Pelosi, D-California, and Senate Majority Harry Reid, D-Nevada, said they plan for Congress to have the bill on President George W. Bush's desk by Feb. 15. The Internal Revenue Service could mail rebate checks as early as May, a U.S. Treasury spokesman said.

Reid has indicated he will push for add-ons to the bill – including an extension of unemployment benefits, increases to food stamps and money for highway projects – before the U.S. Senate passes the stimulus package.

22 Comments

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  • flashlight Jan 25, 2008

    Does anyone out there have any actual proof of this working before? It seems like when this happened shortly after Bush was first inaugurated, we were in a similar situation. So we got our checks in the mail, spent away, and a few years later...ROUND 2...DING!

    By the way, sorry to those not getting money back at all, and will have to now buy the Yukon Denali instead of the Escalade.

  • Doctor Dataclerk Jan 25, 2008

    I love this plan. For the most part, give money to those who didn't pay any taxes to begin with. Those that payed the most will get little or nothing. People will instantly squander the money at Wal-Mart with nothing to show for it and with no long term benefit to the economy. Idiots who bought larger homes than they could afford will be bailed out and encouraged to do the same thing again. The people who provide the jobs by wisely conserving cash to grow their business, to employ more people, and pay more taxes,....will only get the bill for all of the above!

  • Rolling Along Jan 25, 2008

    gnew46...most people don't know what a balanced budget is, or a savings account, or paying cash for what you need and not charging just because you want. Small wonder the goverment is run the same way.

  • gnew46 Jan 25, 2008

    The Federal Government has no money to rebate as the income is solely from us taxpayers. This is just another example of more deficit spending by the Feds leading to more and more Federal debt and a mortgage on the lives of our children and grandchildren. There is something called a balanced budget. Apparantly the Feds have no concept of what it is. By the time the pols finish with the add ons in the House and Senate, this will be little more than a weak band aid.

  • kewlmom Jan 25, 2008

    I am a single mother of two kids, yet I fully agree with readme. The status of my life at this point is the full result of my decisions earlier in life. I should not get extra pay because of it. If readme is putting in 3x's what I am, then he should get back 3x's more than me. This thinking helps promote personal responsibility, something that is sorely missing in today's society.

  • bigred841 Jan 25, 2008

    she me the money!

  • bosoxbaby Jan 25, 2008

    "how does paying down a debt (most Americans are deep in debt) or paying an electric bill stimulate the economy?" -- Rolling Along.

    If you're paying down debt or an electric bill with "extra" money the govt is "giving" you then you have more available income to spend on other things. That's the theory anyway.

  • Winston Jan 25, 2008

    The next time a politician says "we're working with the other side of the aisle",tell them they lost your vote. If their convictions are obviously right, why compromise? When FACTS support me, I WILL NOT COMPROMISE.

  • Winston Jan 25, 2008

    whatelseisnew, you're eyesight is 20/20.

  • Winston Jan 25, 2008

    readme, we(americans) look across the pond and see the way we're going ISN'T going to work, but do it anyway. But, the ignorant can vote. Take your check and have a nice tasty drink.

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