Is a second stimulus plan coming?

October 22, 2008 5:16:42 PM PDT
You may have heard by now. There is talk on Capitol Hill of a second stimulus plan to help pump up the shaky economy. The first time around, most of us got checks in the mail. But this time, that's probably not going to happen. So where would the money go?

The first stimulus plan didn't work the way the government planned and so for round two, the Feds are rethinking the stimulus.

It was a gift or at least it felt that way; $152 billion nationwide in stimulus checks, as much as $600 for most Americans.

"It was free money. They were giving it away," said Houstonian Travis Earthly. "I wasn't going to turn it down."

And what did he do with the money?

"Clothes, shoes and I took care of my baby," he said.

Earthly did exactly what the president wanted us to do when those checks were sent back in April.

"This will also give our economy a boost to help us pull out of this economic slowdown," said President Bush back then.

The problem is most Americans didn't do what Earthly did. According to economists at the University of Michigan, most Americans put the money in a bank and saved it, which didn't stimulate much.

Now, momentum is building in Congress for another round of stimulus. On this second round, the government is still going to spend billions of your dollars, but the bad news for Earthly and millions of Americans like him is that they won't be getting checks this time around.

"We sent checks to individuals. That didn't work very well. We sent checks to Wall Street. That is untested as of this date," said economics professor Dr. Steven Craig. "We're afraid it might not work. So now they're trying to think of a third thing."

And the newest $100 or $200 billion stimulus plan is likely to include aid to states, like California, with budget crises, extended unemployment and food stamp benefits, and billions for infrastructure spending, stuff like highways and bridges.

Since the Great Depression, it's been a part of pulling the country out of a ditch, putting people back to work and getting money circulating. It may keep people like Earthly working, but...

"It takes too long," said Dr. Craig. "Just about the time the economy recovers, then the new infrastructural spending will start."

That's usually the case, but today it may not be. In Texas there's so much demand for new roads and funding has been short that road construction could start pretty soon.

But again, it's all just a congressional thought and we are 13 days from an election. Don't put too much stock in any of it yet.

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