US Treasury Distributes Another 1.5m Rebate Checks As Obama Outlines Stimulus Plan

by Leroy Baker, Tax-News.com, New York

08 December 2008

As the United States Treasury Department announced that it had distributed another 1.5 million stimulus payments in November, details began to emerge at the weekend of President-elect Barack Obama's new economic stimulus plan, which appears to be based on a massive cash injection into the economy rather than tax cuts and individual rebates.

The Treasury revealed on Friday that it distributed rebate payments for a total value of just over USD1.09bn in the month of November. A total of 118.92 million payments have now been distributed since May, after Congress passed economic stimulus legislation in February.

While the mass disbursement of stimulus checks ended July 11, small batches of payments continue to be sent out to American households, and as of November 30, a total of USD96.13bn in rebate payments have been distributed by the Internal Revenue Service. However, this figure pails into insignificance compared to the figures being talked about by the Obama camp as it begins to plan how to turn around the ailing US economy.

It seems to have been widely accepted by some in Congress since Obama won an emphatic victory at the polls last month that a new stimulus plan in the order of USD400bn to USD700bn is needed to help dig America out of potentially one of the worst and most prolonged recessions since the 1930s. But as Obama revealed details of his thinking on what needs to be done about the economy over the weekend, some Democratic aides and supporters have said the new stimulus plan could ultimately be worth about USD1 trillion.

While tax cuts for low- and middle-income America figured prominently in Obama's election campaign, it now appears that the issue of taxation has moved down the agenda for now, and the incoming President seemed to suggest in his weekly radio address that substantial new investment in US infrastructure, rather than tax cuts, will be the cure for the economy. This could result in billions of pubic money being pumped into the national highway network, power grid and renewable energy projects, as well as major new investments in education, healthcare and internet infrastructure. It will also go ahead despite warnings that the federal deficit will soon hit USD1 trillion.

“My number one priority is making sure that we’ve got a recovery plan that is up to the task," Obama told NBC.

“And that means that we can’t worry short term about the deficit. We’ve got to make sure that the economic stimulus plan is large enough to get the economy moving," he added.

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