PRESIDENT BUSH SIGNS STIMULUS PACKAGE!
TAX REBATE CHECKS, BUSINESS TAX BREAKS, INCREASED JUMBO LOAN LIMIT ON THE WAY! WILL THEY HELP?
Beginning this May, more than 130 Million U.S. Taxpayers who file their 2007 Federal Income Taxes will receive rebate checks of between $300 and $1,200. The amount individual taxpayers receive will depend on their income level, family status, and number of children, under the Economic Stimulus Package passed by the U.S. Congress and signed by the President today.
The approved bill also provides a bigger tax deduction for business expenses, geared to spur business spending. Also, very importantly for many homeowners, it increases the ceiling on "jumbo" home mortgage loans salable by Mortgage Aggregator Fannie Mae, as well as FHA loans, available to many with less-than-perfect credit. The new loan limit of $729,750, from the previous limit of $417,000, will allow more homeowners to take advantage of lower-rate, more-easily-affordable mortgage interest rates.
Some economists are optimistic the rebates will spur economic growth. The Stimulus Package will grow the economy as much as 2.50 percent before the end of 2008, in the estimation of Stuart Hoffman, Chief Economist at PNC Financial Services. Without the stimulus, in his opinion, the growth would be 0.5% less.
A growing U.S. economy will encourage businesses hire more employees. Many employers, nervous that the economy is heading toward recession, or may already be in one, cut over 17,000 jobs last month. This was the first job loss nationwide since 2003.
It is still possible, however, that the stimulus will not have the desired effect, as many receiving the rebates will not spend them, but will instead save the money, pay off old debt, or invest it. When tax rebate checks were sent out in 2003, recipients spent only about one-third of the money they received within three months. For rebate checks mailed out in 2001, many taxpayers used the funds for non-durable goods that would most likely have been purchased anyway - food, for example, and clothing.
For more details and relevant video, see today's article by Jeannine Aversa in The Chicago Tribune. Click here for today's coverage in The Wall Street Journal.
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