I’m getting a check from the federal government – woo-hoo! Taking advantage of our two lovely tax deductions – I mean, kids – my family should receive $1,800 as part of the federal government’s economic stimulus payments. But it’s imaginary money – money for which the feds assume I’ll be paying taxes for 2008. I haven’t earned it yet, but I’m getting to spend it now.
There are some who would say that returning some of our tax money to the people is only right. The government takes our dollars to run all these wasteful social programs, and now that the economy’s tough, we need it more than the government does.
No argument from me there. Our family of four is in the single-income, more-bills-than-we-need category. We’re not about to lose the house, but the days of eating out twice a week are gone. Peanut butter is the luncheon du jour. We no longer have cable TV, the combo caller-ID/call-waiting phone package, or the budget for one more pair of boots.
The U.S. economy is in “slowdown” (nobody say recession – that’s bad luck!). Traditionally when this happens, the government cooks up ways to encourage us to spend money, thereby propping up the economy. Or they lower interest rates in the hopes that we, yes, spend more money. The Congressional Budget Office says that these kinds of fiscal stimuli “aim to boost economic activity during periods of economic weakness by increasing short-term aggregate demand.”
That’s fancy talk for “if we have more money to spend, we’ll spend it.” Again, no argument from me there. Gas just topped $3 a gallon. My kids need stuff for school and sports, and we have an enormous healthcare debt from our medically needy older child to pay down. We already have a house. We already have cars. The money we spend goes to either small-ticket items or paying off debt, and I’m not clear how this kind of spending helps the economy.
The bad news is this imaginary money coming back to Americans means there’s precious little real money to keep our safety-net social services floating. Or to continue fighting a very unpopular war.
Writing in The New York Times, Robert Reich put it best: “The problem … is the culmination of three decades during which American consumers have spent beyond their means. [Now] consumers have run out of ways to keep the spending binge going.”
Simply giving us a temporary cash infusion will not solve the real problem. America is a nation of over-consumers whose dependence on credit (more imaginary money) has wrought this crisis.
Over-consumption is not new to this decade or even this century. Look back to the 1920s. The decade began with promise of greatness – there was a Ford in (almost) every driveway, and anyone who had access to clean running water could have a washing machine.
The problem was (and is) that consumers can buy houses, appliances, and cars only every so often. When the market becomes flooded with stuff, the heat is on to persuade us to buy more. When we can’t buy more stuff, companies reduce their workforces or move factories to places where the labor is cheaper. More Americans are out of work and have less to spend. The consumer indexes decline, which panics those people who make their living telling us what to buy.
The economic crisis during the Great Depression might have been avoidable if corporations had paid workers more, or if the government had intervened at the beginning when the stock market became inflated with investors using imaginary money to speculate on stocks. People tend to frown on either of those options, as they look a lot like socialism.
Why shouldn’t we buy what we want with imaginary money? What does it matter if much of the stuff we buy comes from another country, is made by workers from another country, or is serviced by people from another country? Does it matter that the average American will likely use this money to buy, say, a big-screen TV made in China? Clothes made in Pakistan, the Ukraine, Mexico, or Vietnam?
For our imaginary money to actually have an effect in shortening the recession, all of us have to use it to buy American-made items, so that the dollars stay here and pay American workers. And be sure you’re buying from a company that actually employs your neighbors down the street (not the guy named “Kevin” in Bangalore.) And if we have anything left, we should support our community’s nonprofit social service agencies that will soon be faced with tremendous shortfalls.
The government’s economic stimulus payments to 130 million Americans up front will end up increasing America’s deficit by a whopping $100 billion dollars at the back end. In situations like that, it’s usually social service budgets that get it in the neck.
So enjoy your imaginary money while it lasts. Maybe it will come in handy for real needs. Maybe it’s an election-year be-happy ploy. Just remember that, in the end, it’s coming out of your own pocket.
Laurie Barker James is a Fort Worth freelance writer.