Posted on 08/20/2003 4:47:07 AM PDT by AntiGuv
SAN FRANCISCO (CBS.MW) - Almost half of Americans who've received tax-rebate checks have used the money to pay off their debt -- not spent it in the mall, according to a recent CBS News/MarketWatch poll.
Thirty percent of those surveyed said they've received their rebate checks and of those, 46 percent said the money went to pay bills. Another 29 percent said they've saved or invested the rebates, while just 18 percent said they spent it.
The results are at odds with the Bush Administration's hope, and possibly that of retailers, for the tax rebate: that Americans would spend the money to help stimulate economic recovery.
The statistics are similar to the results of another poll conducted two years ago, during the first round of tax cuts. In 2001, 43 percent of tax rebate recipients said they used their check to pay bills, 32 percent saved or invested the money and just 15 percent spent it.
Two consumer credit reports released last week dovetail with the poll's findings.
The Cambridge Consumer Credit Index, a monthly survey on credit card use, fell to a reading of 55 in August from 60 in July, indicating that consumers are less willing to take on new debt.
And a report from the Federal Reserve showed a rare decline in consumer credit for the month of June. Total consumer credit, excluding mortgage-backed debt, fell $400 million in June to $1.761 trillion, the Fed said. See full story.
As for the people surveyed in the CBS poll, about 55 percent said they had not yet received their rebate check, and about 13 percent of the respondents said they did not expect to receive one.
Those who did receive it were no more likely than those who didn't to say the recent tax cuts would help create jobs.
But the tendency to pay bills rose as household incomes fell. Of those Americans with annual household incomes totaling less than $50,000, 55 percent said they used their tax rebate to pay bills. By comparison, in households bringing in $50,000 or more, just 34 percent used the funds to pay bills. More of those in the higher-income households reported they either saved the money or invested it.
CBS News conducted the poll among a random sampling of 798 adults across the nation interviewed over the telephone on August 11 and 12. The margin of error is estimated at plus or minus four percentage points.
Spouse and I decided to do the same 5 years ago. Not easy but we did it.
Anyone who pays off high interest debt is cutting the interest debt. Once you get all the interest paid, you will have more money to spend. We have no credit card debt and pay every credit card bill in full every month. The only interest we pay, is on our home mortgage.
Your statement was accurate, but it's NOT just taxpayers who will be getting these checks. Yes, you do have to have kids to get this, but even families with zero income tax liability will get these. In that regard, many of these are not tax-rebates, but welfare checks or transfer payments. And before anyone chimes in with the "they are too tax payers...they pay social security taxes!" connard, it should be noted that these people are refunded almost every penny (in some cases more) of the social security taxes that they paid in, through (un)earned income tax credit.
Welfare ended as we knew it....now the lower rungs of the middle class are on it!
That said, for all those who use credit cards is there any doubt these people will charge up their balances again ?
Only if you have a job :-)
The month after and the month after have redueced income taxes that have kicked in so your take home pay is higher and your dividend check is worth more. This "paltry" amount is just the first installment.
Wait a minute. I thought this tax cut was only for the rich. Is CBS Suggesting that 87% of the population is "rich"?
Reducing or eliminating debt is a good thing for the long term and it needs to happen. The consumer has been spending money like drunken sailors for years. Real savings rates have been negative for a while. How long can consumers continue to spend 105% to 110% of their income? With interest rates jumping last month, the refinance boom is now coming to a quick end. Yes, new housing numbers recently spiked to a 17 year high, but that was people rushing in, fearing even higher rates. It was a very large blip, but a blip nonetheless.
Whith interest rates rising, the consumer will have to pay more to service the debt he/she has already stacked up. The people paying down their debts with these checks are doing what needs to be done, not what the feds want them to do.
Why would you say that? What are the alternative? Saving? That's worthless, creates no value. (And any increase in money available for investment from savings can be duplicated by changes in FED rates or rules.) Paying off debt? Again, creates no wealth, but it at least it reduces the overhead of servicing the debt.
Unless American consumers are at the point of having such high personal dept that spending more is counter productive, I think more spending does equal "good for the economy". This of course assumes that the economy isn't already running at near 100% and that waste and inefficiency aren't unusually high.
No worry on the job lost factor. Remember its the dollar value that companies compare to overseas. If more jobs are moved offshore it cost more to convert the dollar. Therefore it would be cheaper to build the product here. Its a cycle and its main change will be new equipment for manufactures. Since to have the same production a company would hire the same amount of employees they let go and have higher tech machines to compensate for the labor change.
One has to be pretty ignorant of economics and politics in general to think giving people as much of their money back as the voters will allow is "Democrat economics".
I presume like Rand you favor the gold standard, or some such variation, that rewards hoarding as much as risk taking. Under that standard, as the pie gets bigger everyone that sits on his share of the gold has his assets inflated proportionally, parasites on industry. By definition half the available capital will always be in the hands of gold brokers. That's cripples capitalism. Greenspan started there, and then grew out of it.
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