The spending spree that never happened

Salon's readers promised to save their stimulus checks or use them to pay down debt. Guess what? That's what the entire nation ended up doing

Published August 7, 2008 3:30PM (EDT)

In February, I asked Salon's readers how they intended to spend their fiscal stimulus checks. By and large, with a couple of notable exceptions (hookers and blow!) you all presented yourself as a reasonably responsible bunch. The vast majority declared you would either pay down your debt or sock it away as savings.

And guess what? Apparently, the entire nation followed the same plan. Writing in the Wall Street Journal today, economist Martin Feldstein says that the most recent government statistics indicate that only 10-20 percent of the economic stimulus checks were spent.

Tax rebates of $78 billion arrived in the second quarter of the year. The government's recent GDP figures show that the level of consumer outlays only rose by an extra $12 billion, or 15% of the lost revenue. The rest went into savings, including the paydown of debt.

Feldstein originally supported the tax rebate plan, but now uses its supposed failure to argue that Obama's plan for a second stimulus boost won't work either.

Perhaps not. But isn't the real story here the implicit recognition on the part of the American public that we are mired in too much debt and maybe, just maybe, spending even more money isn't the best way to extricate ourselves from the morass?

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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