The federal government has tasked me with stimulating the economy by handing me $600 … again.
I confess I’ve had my eye on a new record player (Joe Biden and I share a passion for spinning vinyl). But here’s my question — is that the kind of thing we borrow money from our grandchildren to enjoy? Perhaps if we call it the American Audio Reinvestment Program (AARP) they’ll catch on. They don’t even know from record players and now they’ll be paying interest on my little toy for the next 100 years!
The thing is, I’m one of the lucky ones. I’ve kept my job and my wife has, too. We’ve worked from home and avoided COVID, so far. We don’t need the money for the mortgage, utility bills, food, or medicine. The kids are fine. So — spend the $600 on stereo equipment I’m going to buy anyway?
What else? I could save it — put it in my IRA. But that won’t stimulate the economy, it’ll just boost stock prices. That means I’ll be handing over my $600 as stock dividends to the wealthier folks who missed the $75,000 cutoff for stimulus check eligibility. How’s that? Simple math — 10 percent of American households own more than 80 percent of U.S. stocks. Those are folks making over $200,000 a year.
I’m not alone with this discretionary spending problem. Take the slice of households making $100,000 to $150,000 — that’s 19.3 million households that are getting either $600 or $1,200, depending on how many earners they have. Average that and call it $900 per household. $900 times 19.3 million equals 17 billion, 300 million bucks.
That’s some lottery we just won — with tickets purchased by the grandkids! If we add in the other 15 million households above the national median income — those making $75,000 to $100,000 — that’s another $14.4 billion in borrowed lottery winnings or a total of about $35 billion.
Every household is different, of course. Some live in expensive cities, some have big medical bills or kids in college. But spending $35 billion on households above the median when there are nearly 70 million households below median income and in far deeper economic trouble — that just doesn’t square up. Households making less than $60,000 to $70,000 a year that are months behind on the rent or the mortgage or medical bills — those folks need far more than $600 bucks.
My real question is — why is it so hard for us Americans to help the people who really need it, invest for the future and stimulate the economy, without burdening our grandchildren with massive debts that will leave them with less margin to address their own emergencies? Is handing money to everyone the only way we break through political gridlock and help people who are unemployed, sick, losing their homes?
I want a government that doesn’t pander to me — that can walk and chew gum. That’s what I spent my first stimulus check to buy. Last July, I went to the political track and bet my first $600 on nine Senate candidates. Four of them won and flipped the do-nothing Senate — barely. So now that I’ve got a government bought and paid for, what should I tell my minions to do?
How about a $4,000 bonus for anyone unemployed who gets a job (paying up to $75,000), paid out $500 per quarter for the first year? Employers could take it as a tax credit. That would win votes across the aisle, incentivize re-employment, and get money quickly to households that lost earnings when businesses closed and cut jobs. That’s a rough sketch for just one idea. What’s your idea for speedy, stimulating investments that help the most harmed get back on their feet?
Thirty-five billion dollars sounds like pocket change when the federal government is going into the hole by trillions. But when we finally start addressing the long term investments that will make our economy truly healthy — the unfunded roads, rails and bridges, the affordable housing, child care and health care so many need, the green energy transition — we’ll need that $35 billion and much more.
When we all get handed “free” money, we each now have to ask ourselves — do I really need the government to help me? I’m not waiting for Congress to figure that out. My $600 is going to our local Community Action agency, where it can help a neighbor make a rent payment or pay a utility bill.
How will you spend your $600?
Andrew Baker is a U.S. citizen, a taxpayer, a voter and a Shelburne resident who helps unemployed folks retrain for careers in advanced manufacturing … in that chronological order.