My idea for an economic stimulus.

[JohnnyRingo]

It may be too late to save this Christmas for retailers, but I was thinking about how the government sent out checks this summer to boost the economy. I agree that putting money in the hands of consumers is the best way to increase demand and create jobs by taking the supply from overstocked store shelves.

The problem was, many people used those checks to pay their mortgage, electric bill, or existing credit card balance. I understand that was helpful for those who were ready to go under from personal debt, but obviously did nothing to kick start our consumer driven economy.

I think in the future they should issue a debit card that can be swiped at any merchant that uses a credit card reader to ensure the stimulus feeds directly into the retail side instead of being horded or deposited ineffectively into the accounts of the banking and utility companies.

We already use this system in place of the old food stamp program, so the feds already have the means to make and distribute the cards.

This will help twofold. Purchases will add to state sales tax bases to replenish depleted state funds, and local small businesses will see an increase that may help save those merchants that are close to nailing up plywood on their business and giving up. I've thought hard on this, and I don't see the downside to it.

I know our consumer based economy is a monster in itself, but when capitalism works, it works well, and everybody's happy. Imagine if, instead of an intangeable tax cut or rebate, every year about this time every taxpayer got a $600 debit card in the mail, and told to "go shopping" just in time for the holidays?
Married filing jointly? That's two separate cards to the family, Merry Christmas.

While the boost would certainly be temporary at first, and hiring may not last long, it's the theory that this would restart the supply/demand cycle and could usher in a new era of consumerism that may at least help make the next president look heroic indeed.

Hell, he can put his and Biden's smiling picture on the card if he wanted to, so we'll know who to thank.

[Veritas_et_Aequitas]

1. I suppose it could work, as long as the card couldn't be used at an ATM.

Still, it would be a pretty short-term fix. The current problem seems to be structural and must be addressed by regulation and legislation.

[DJ13]

2. The problem was.. people used those checks to pay.. credit balances

Were in a credit crisis.

Paying down consumer debt helps ease the crisis.

Really whats needed is a government program to either forgive consumer debt, or refinance a reduced balance on a long term basis at as close to zero in interest rates as is possible.

That would alleviate pressure on consumers, allowing them to spend once again.

Just sending them a check amounts to a short term solution that doesnt help in the long run.

[JohnnyRingo]

3. I thought of that. The debit card could be used by those who hold credit balances to buy daily goods

freeing up this month's paychecks to pay down their debt if they choose. That would have little effect for local merchants, but most people would find a balance between shopping and responsibilties.

A $600 windfall doesn't have to go to a plasma screen at Best Buy, and the concept of a debit card could follow a consumer as he goes about his weekly routine. He could stop & swipe at the gas station and the grocery store, then put the card in his wallet for later if he wanted.

One of the things it can't be used for is untaxed goods including drug deals, since the dealer has no way of determining the balance.