Please Just Send My Tax Rebate To Mastercard And Save Me The 41 Cents...

As my fellow coworkers know, 2007 was a year of change for me. I moved to Washington, D.C., bought a house, married a fantastic woman, adopted a great dog and started a new job at Campaign for America’s Future.

On Tuesday I received my W-2 from our Operations Manager with great delight. Since we had bought a house, we are primed for a big tax return! While visions of a new truck or boat have danced through my head like a 4-year-old on Christmas Eve, I know exactly where our tax return is going. A large chunk will go into a savings account and the rest will pay off wedding debt. And you know what, I am pretty happy about that.

Today, I hear that President Bush is advocating for up to an $800 tax rebate per taxpayer as the main thrust of an economic stimulus package. So again, slightly modified visions of new parts for my truck or a much smaller boat begin to do the Electric Slide in my dreams. Then I remember that my little Ford Ranger is close to being paid off. $800 would pay it off and leave enough money to buy a new timing belt to put on it.

I applaud Washington for working together quickly to find a short-term fix to the looming recession. However, I worry that it is a fix designed to infuse the finance industry with cash, not jump-start a stalled economy or provide real economic relief to the middle class.

Couple the huge loss of home equity in the last two years with credit card debt, inflation, and economic uncertainty and I don’t think these rebates ever leave the bank. I’m betting most households use the rebate to pay down debt or boost savings. Everyone is planning for the looming recession that the middle class saw on the horizon and felt in their belly before anybody on K Street or Wall Street decided they should hold off on buying that new Porsche.

So, President Bush is going to send my tax return, hopefully a few thousand dollars, along with my $800 rebate to my Bank of America account. Then I’ll log on to my account the next day, transfer half of it to savings, then use electronic bill pay to send $748.00 to Suntrust to pay off my truck and the rest to Mastercard to pay down our wedding debt.

The net economic stimulus: I’ll give Napa Auto parts about $30.00 for a timing belt that I’ll put on my truck myself.

While the rebate does indeed pay down my debt, it seems like I’ll just be babysitting it for a few minutes before I give it to SunTrust and Chase Banks. I certainly wouldn’t call it economic stimulus.

WAIT!!! That’s it! Maybe that’s what the rebate was designed to do: Bail out the finance industry with a huge cash infusion of taxpayer money. The banks and credit companies are swimming in bad debt and taking losses because decent folk can’t afford to pay the loans they were told by “experts” they could afford. Stock prices are tanking and real regulatory and tax reforms are looming. So Washington's answer is to give a ton of money to debt-strapped taxpayers so they can pass it along to the banks and we can all avoid addressing the underlying economic problems. I call it trickle-up economics.

Voila! Wall Street crisis avoided, President Bush looks like a hero, and everyone can all get back to the business of building up the consumer debt that is the cost of chasing an American dream that is all but dead.