Noise is accelerating around Capitol Hill about a second economic stimulus check. The reasons cited have a great deal to do with the “success” of the first economic stimulus payment this year. Indeed, reports the Wall Street Journal, the first economic stimulus check was spent at a more rapid rate than the check sent in 2001:
As outlined in The Wall Street Journal today, the preliminary assessment found that the typical family increased its spending on food, mass merchandise and drug products by 3.5% once the rebates arrived relative to a family that hadn’t received its rebate yet. The average family spent about 20% of its rebate in the first month after receipt, a slightly faster pace than with the 2001 rebates.
But, members of Congress point out, inflation in food and energy prices provided an offset to the economic stimulus checks. Therefore, they reason, more money is needed. The main problem with this idea is that a great money supply means…more inflation. And since other measures are also being made to stimulate the economy, inflation is likely to be a fixture in the coming months.
Another problem with a second economic stimulus check is that the money has to come from somewhere. Where it will come from is probably a number of foreign creditors. (Good thing the just-signed housing relief bill raises the ceiling on our national debt.)
While I agree with Barack Obama that building infrastructure will create jobs and help the economy, I’m not really on board with his support of a second economic stimulus check. There are plenty of other, creative ways, to help the economy — many of them involving job creation rather than another one-off payment that has no real and lasting effect.