President Bush signed legislation on Wednesday to send $300 to $1,200 rebate checks to millions of Americans as a "booster shot" for the economy.
Rebates are to go out beginning in May to taxpayers and low-income people, including seniors living off of Social Security and veterans who depend on disability checks. Businesses would get tax breaks for investing in new plants and equipment.
"I know a lot of Americans are concerned about our economic future," Bush said. "Our overall economy has grown for six straight years, but that growth has clearly slowed."
Several dozen members of Congress, including House Speaker Nancy Pelosi, stood on the stage behind Bush as he signed a bill to fend off a possible recession. He said the stimulus package was achieved after he talked with leaders of Congress in January about "whether or not we could come together to provide a booster shot for our economy — a package that is robust, temporary, and puts money back into the hands of American workers and businesses."
Most taxpayers will receive a check of up to $600 for individuals and $1,200 for couples from the Internal Revenue Service, with an additional $300 per child. People earning at least $3,000 and those who owe little or no taxes would get $300 for singles, $600 for couples. Those making more than $75,000 and couples with income exceeding $150,000 are to get smaller rebates — $50 less per $1,000 they make over those thresholds.
"Americans struggling with the high cost of energy, groceries and health care will soon receive relief, and our economy will get a timely, targeted, and temporary boost — thanks to our bipartisan stimulus package," Pelosi said. "This package gets money into the hands of Americans struggling to make ends meet, helps families with children, cuts taxes for small businesses that will create new jobs and stimulates our slowing economy."
Economic analysts generally believe the $168 billion package Bush signed will help prevent the current downturn from ballooning into a crisis. But if the rebates don't spur a consumer spending spree strong enough to cure what ails the economy, Congress is ready to throw more money at the problem. Bush said the measure was "large enough to have an impact."
Democrats and Republicans who put aside deep differences to craft the plan and rush it to enactment joined the president at the White House for the signing ceremony in the East Room. The package is designed in part to inoculate lawmakers from voter blame should the economy continue to lag as the November elections bear down.
Congressional leaders already are considering more economic rescue measures that could include transportation spending, unemployment aid and measures to address the housing crunch that's at the root of the current economic doldrums.
In the meantime, economists are debating how effective the rebates will be, with critics arguing that debt-burdened consumers will use the money to pay bills rather than spending the checks and spurring growth.
An Associated Press-Ipsos poll found that only 19 percent of those surveyed said they planned to spend their rebate checks. Forty-five percent said they would pay bills, while 32 percent said they planned to invest the money.
The last time the government sent out rebates, in 2003, recipients spent a little less than a third in the first six months, and about two-thirds within the first year, according to findings by the University of Michigan Survey of Consumers, cited by congressional tax analysts. After rebates were sent out in 2001, just 22 percent said they would mostly spend them — rather than saving the money or using it to pay off debt — and only one-third of the rebate was spent in the short run, according to the same study.