Taxpayer asks:
I saw on the news that we will have a second check in February. I can’t find it again. Can you help?
Taxgirl says:
Wow. Just wow.
I’ve received a slew of similar emails over the weekend.
I don’t know where this info is coming from – or what news program might have reported it – but it’s simply not true. To be clear:
- The proposed stimulus package under President Elect Obama does not include a second rebate check;
- The proposed stimulus package does include a new tax credit but the credit is related to payroll withholding, not a rebate check;
- No tax cuts, no tax credits, no additional tax breaks have been made official under the Obama administration – he’s not even in office yet (!);
- Even if a stimulus package passed this week, there is no way that any sort of tax credit would be in place for February. Our government just doesn’t move that fast.
The economy is big, big news these days. If there were really a package in place that would send checks your way, you’d see it on every single news venue. And you’d see it on taxgirl.
You aren’t seeing it anywhere else because it’s all just speculation. There’s nothing. Na-da. No checks in the mail.
As promised, I will update you on the site as soon as I hear any tax news for 2009. Really. If you want to actually follow the path of the legislation, you can keep checking with the Library of Congress.
Sorry to disappoint.
Like any good lawyer, I need to add a disclaimer: Unfortunately, it is impossible to give comprehensive tax advice over the internet, no matter how well researched or written. Before relying on any information given on this site, contact a tax professional to discuss your particular situation.
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President Elect Barack Obama has promised that he will do “whatever it takes” to stimulate the economy. While he hasn’t laid out the entire plan, Obama has put an economic team in place to begin work on a stimulus package.
Calling the potential package “costly” (imagine that!), Obama refused to put a price tag on the plan, only saying:
We have to make sure that the stimulus is significant enough that it really gives a jolt to the economy.
Obama did not say whether the plan would include immediate tax cuts or rollbacks for the Bush tax cuts. He did indicate that the package would include proposals meant to create jobs, with the goal of adding an estimated 2.5 million jobs.
There were no signs that Obama would include a bailout for the Big Three in the package, though Obama generally agrees that some aid for the automakers is needed. Obama agreed with Congress that the automakers could come back with a workable plan before help was extended, saying, “I think Congress did the right thing, which is to say, ‘You guys need to come up with a plan and come back before you are going to get any taxpayer money.’”
What else was noticeably missing from Obama’s remarks? Any sign of a second stimulus check. Remember, a stimulus package is not the same as a stimulus check. And despite reports to the contrary, there is no plan to issue a second stimulus check before the end of year. Even if Obama were inclined to include a second stimulus check in his stimulus package, he is not the sitting President, he is the President Elect. Any serious proposals to issue a second stimulus check by the end of the year would have to come from President Bush (not going to happen) or the lame duck session of Congress (also not going to happen).
With that, don’t expect any serious economic proposals for individual taxpayers until January, though there is a possibility we could see something happen for the Big Three by the end of December. We may also see more “rescues” for the banking industry – the bailout of Citibank today, combined with Obama’s Treasury pick, sent stocks soaring. The Dow Jones and S&P together experienced the best two-day rally since 1987, a sign that confidence in the markets may be on their way up (or not, I’m trying to be optimistic!).
Even though many politicians – including President Bush – are still reticent to use the “R” word (recession), economic pundits, including those in the Bush administration are using it. Ed Lazear, President Bush’s chief economic adviser, has been quoted as saying that “parts of the country” are in a recession.
With the threat (or reality, depending on where you land) of a recession looming, there is now a rush to consider a second stimulus package. Federal Reserve Chairman Ben Bernanke has told Congressional leaders that “consideration of a fiscal package by the Congress at this juncture seems appropriate.” He did not, however, use the “R” word, instead referring economy as in a “protracted slowdown.” His suggestions for a stimulus package include direct lending from the federal government to states (a measure that Governor Schwarzenegger of California also supports), consumers and businesses; he has also backed the idea of additional tax credits.
As Bernanke made his announcement, it seems that even President Bush is warming to the idea of a second stimulus package. Just two months after the President objected to the idea of a second stimulus package, the White House has signaled that President Bush would now be “open” to the idea of an additional package. The administration has not agreed to any specific plan and has not indicated which details he would approve.
The Democrats have floated several plans but have not reached a conclusion as to the best overall package. One version included a small rebate check but was not expected to pass and has, in recent weeks largely been ignored. The most recent plan proposed by House Speaker Pelosi focused on extending jobless benefits and increasing infrastructure spending but does not include rebate checks.
The Republicans have been much more apprehensive about a second stimulus plan. Most in the GOP are not on board with the Democratic proposals. Instead, the GOP wants to focus on additional tax breaks including a temporary elimination of capital gains tax on stocks. They have also suggested offering capital gains exclusions for taxpayers with multiple residences in an effort to reduce foreclosures by those who own more than one home.
With such disparate proposals on board, it’s highly unlikely that a resolution will be reached before the end of the year. Democrats have indicated that they are hopeful that if Obama wins the White House, they may have leverage to pass legislation within two weeks of the election – Congress is off session until after the elections. However, the reality is that no matter who wins, Bush will remain in the White House through mid-January. His approval would be needed for any stimulus package as the threat of veto would remain so a compromise will be necessary.
So, there are lots of reports being circulated about what could happen. But to be clear, despite rumors to the contrary, no second stimulus package has been approved and no additional stimulus checks are being mailed as a result. Keep checking back for details as they become available.
I indicated earlier that I didn’t think that a second economic stimulus package would be considered until after the elections – and it looks like that is, in fact, the case. I’m actually still confident that any stimulus package which includes “tax rebates” would not result in checks being mailed out until the new year.
Nonetheless, Democratic leaders have indicated that they will pursue a second economic stimulus package as soon as two weeks after the elections. The package is said to include extended jobless benefits, money for food stamps and maybe – just maybe – another tax rebate. The cost of the additional package is estimated to be $150 billion.
But talking is just that – talking. The real challenge is that even if the Democrats won the White House, any attempts at pushing new legislation next week means negotiations with the current President; most agree that President Bush, who remains in office through January 20, 2009, is not likely to agree on the House version of the bill as it is contemplated today.
House Speaker Nancy Pelosi believes that some stimulus is necessary. Senate Majority Leader Harry Reid agreed, saying:
“recent developments only reinforce the need for additional action to reinvigorate the economy.”
The House had passed a $61 billion economic stimulus package just before the election break but the package was never really intended to become law; the GOP Senate had already indicated opposition to the bill. That package included jobless benefits, Medicaid assistance and improvements to the nation’s infrastructure. There were no rebate checks included in that bill.
With respect to a new stimulus package, Republicans are said to be “skeptical of a second stimulus” but are not necessarily opposed. The main concern is the proposed cost of the plan, considering the state of the economy. The nonpartisan Congressional Budget Office has reported that the federal government will run a near-record deficit of $407 billion this year and next year’s deficit could reach a record $438 billion. This does not include expenditures related to the bailout.
The Democrats in the Senate appear to echo the Republicans’ concern on some level. When speaking about a second stimulus package, Sen. Charles Schumer indicated support for a package that could range from $50 billion to $75 billion. A package of that size would almost certainly not include additional rebate checks.
So even if the House gets its way, don’t get too excited: all indications are that rebate checks would be limited. The last stimulus package included $100 billion of rebate checks and still left many taxpayers out completely. Even the “best case” scenarios being presented hint that a second round of rebate checks would total less than $65 billion, meaning that even more taxpayers would be left out of the second package.
It’s that last part that the Democrats have to keep in mind. The last round of checks left many angered that benefits were not extended to all taxpayers; to then extend a second round of benefits to fewer taxpayers (approximately 1/3 less) may cause widespread dissension.
What do you think? Good idea or not?
