President Bush signed legislation Wednesday that will send $300 to $1,200 rebate checks to millions of Americans as a “booster shot” for the economy, The Associated Press reports.
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, the AP reports. Businesses would get tax breaks for investing in new plants and equipment.
Several dozen members of Congress, including House Speaker Nancy Pelosi, stood on the stage behind Bush as he signed the $168 billion package designed to fend off a possible recession, the AP reports.
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.
The National Retail Federation welcomed the signing of the legislation.
“To see a bill signed into law this soon is almost unprecedented. This fast action shows the urgency of this issue and the commitment the White House and the leaders of both parties in the House and Senate were willing to make to give our economy the shot in the arm it so badly needs,” said Steve Pfister, NRF senior vice president for Government Relations “This is simple, targeted stimulus that will quickly put money into consumers’ pockets where it can boost growth by creating demand through all sectors of the economy.”
Pfister was one of several trade association executives and business leaders, who attended the signing.
Consumers plan to spend 40.6 percent of tax rebate checks when they are distributed later this year, which will provide an immediate $42.9 billion boost to the economy, according to an NRF survey released Wednesday.
The survey, conducted by BIGresearch, also found that the $105.7 billion distributed in tax rebates will be used to pay down debt ($30 billion), saved ($19.8 billion), invested ($4.4 billion), and used to pay down medical bills ($4.6 billion).
“Tax rebate checks should have the desired effect of both bolstering the economy in the short-term and putting consumers in a better position to spend for the future,” said Tracy Mullin, NRF president and chief executive officer. “This stimulus package is a crucial component to economic recovery and will provide much-needed relief to American shoppers.”
While women will spend a larger percentage of their rebate check than men (43.6% vs. 37.3%), both genders will plan to set aside the same percentage for savings (18.7%) Young adults 18-24 will spend more of their checks (46.2%) than any other age group.
Other highlights of the bill:
* The total package amounts to roughly 1 percent of U.S. economic output, and will add directly to the U.S. federal deficit.
* The plan includes a provision that Democrats had sought that would allow some low-income workers, retirees on Social Security, and disabled veterans who do not earn enough money to owe income taxes to receive a check. Those who made at least $3,000 last year and paid no income taxes would be eligible for a check of up to $300 for individuals and $600 for couples.
* It allows more subprime mortgage holders to refinance into federally insured loans by raising the limit on Federal Housing Administration loans from $362,790 to as high as $729,750 in expensive areas. And increase the availability of mortgages by providing a one-year boost to the cap on loans Fannie Mae and Freddie Mac can buy, from $417,000 up to $729,750 in high-cost markets.