- The Washington Times - Saturday, April 26, 2008

President Bush yesterday said the Treasury Department will send the first tax rebates to millions of Americans on Monday, a week earlier than initially planned — and not a moment too soon for consumers weighed down by soaring gas prices and falling housing wealth.

Almost 7.7 million Americans are expected to receive rebate checks electronically by direct deposit next week. On May 9, the Internal Revenue Service will begin mailing millions of checks across the country.

By summer’s end, about 130 million households will have received rebate checks of up to $600 a person or $1,200 for couples, and an additional $300 per child.

“This money is going to help Americans offset the high prices we’re seeing at the gas pump and at the grocery store, and it will also give our economy a boost to help us pull out of this economic slowdown,” Mr. Bush said.

The IRS initially had predicted that checks wouldn’t be delivered until early or mid-May because of computer and printing capacity. But Treasury worked with IRS to accelerate the schedule, the administration said.

Republican and Democratic House leaders yesterday held a rare joint press conference to praise the IRS for churning out the checks so quickly.

“We believe and hope that this stimulus package will, in fact, if we’re not in a recession, stop us from going into a recession, [and] if we’re in a recession, bring us out of a recession and resuscitate this economy,” said House Majority Leader Steny H. Hoyer, Maryland Democrat.

Congress approved the rebate checks earlier this year as part of a $168 billion stimulus package designed to help jump-start the sluggish economy. The rebates will be less for taxpayers earning more than $75,000 a year, or couples making more than $150,000.

The stimulus package also provides businesses with tax breaks for investments in plants or equipment, which are intended to be an incentive to retain and create jobs.

Consumers know they’re being pinched. A measure of consumer sentiment published by the University of Michigan fell to a 26-year low yesterday.

Worries about jobs, inflation and the economy have risen steeply since the beginning of the year, and have caused a significant pull-back in consumer spending.

Democrats say they would like to develop another economic-stimulus package — a proposal opposed by congressional Republicans and the White House, who say they want to see the effects of the first package before discussing a second one.

It will take a year or more before the full effects of the rebate are known, said Peter Morici, a University of Maryland business professor and former chief economist at the U.S. International Trade Commission.

“It’s not a matter of whether [the rebates] are going to help or not, but it’s a matter of how long it will take to feel the impact,” he said. “They’ll help, but not enough.”

Mr. Morici said the rebates will provide about a $300 billion boost to the economy, or about double their cost. For the program to have any meaningful economic effect, the check amounts should have been doubled, he said.

“What would you rather have, a little more debt or a recession?” Mr. Morici said.

But some anti-tax and free-market groups say rebates are not the best way to stimulate the economy.

“It’s money that belongs to taxpayers originally, but it’s just shifting wealth around,” said Natasha Altamirano, a spokeswoman with the nonprofit National Taxpayers Union and Foundation. “It’s like taking water from the deep end of the pool and throwing it in the shallow end.”

The Club for Growth said the rebates will have little or no positive effect on the economy.

“It’s completely useless,” said group spokeswoman Nachama Soloveichik. “We’re just taking money from one sector of the economy and giving it to another.”

Some Democrats said the checks will only be eaten up by higher costs.

“It’s galling to think that taxpayers’ stimulus checks will be lining the pockets of OPEC,” said Sen. Charles E. Schumer, New York Democrat and chairman of the Joint Economic Committee, referring to the Organization of the Petroleum Exporting Countries. “The sad truth is that the average American family will spend almost their entire stimulus check on higher gas prices this year.”

c Jon Ward and Patrice Hill contributed to this article.


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