All about business

Chrissi Squires, 21, a mother of three from Fort Carson, Colorado, intends to pay off credit card debt. Cheryl Coon, 61, a homemaker from Franklin, Pennsylvania, has her eye on a new washing machine. Martha Hinson, 62, a teacher's aide in Conley, Georgia, said she's getting a new pair of dentures.

As the U.S. Treasury prepares to start issuing $117 billion in rebate checks this week, taxpayers in dozens of interviews around the country said they plan to spend the money rather than save it — exactly as policy makers hoped. Congress voted the money in February as part of a $168 billion package to stimulate an economy slowed by record mortgage foreclosures, job cuts and rising prices of food and fuel.

Payments will be as much as $600 for individuals who made $75,000 or less and $1,200 for married couples with household incomes as high as $150,000. Each eligible child is worth $300 more. Still, the total payout will be less than a third of the $389 billion Americans spent on gasoline last year.

“I am going to be paying oil bills, and that won't even cover that,'' said Kathleen O'Neill, 52, a waitress at the Miss Bellows Falls Diner in Bellows Falls, Vermont. “It's a no-win because you have to send it out to the oil company, the gas companies and now the mortgage companies.''

This is the 10th time since 1962 that the federal government has attempted to spur the economy through tax benefits aimed at businesses and individuals. Of those, four included cash rebates, according to the House-Senate Joint Committee on Taxation.

Past rebate programs — in 1975, 2001 and 2003 — “provided modest stimulus to consumption,'' causing a short-term boost, the committee said in a February report, citing analyses of seven studies. “Around one-third to two-thirds'' of the rebate amounts were spent, the panel found.

Stimulus Estimates

Some economists predict this year's rebate will produce similar results. Others, including J.D. Foster, a senior fellow at the Heritage Foundation in Washington, say the effect will be negligible.

“To the degree somebody spends the money, that raises consumption, and there's a multiplier that goes through the economy,'' said Jason Furman, a senior fellow at the Brookings Institution in Washington.

The rebates may add as much as 3 percentage points to economic growth during the 10-week payout period, today through July 11, Furman estimated. That's a view shared by John Silvia, chief economist at Wachovia Corp. in Charlotte, North Carolina, who said the temporary boost “will be the end'' of concerns over a recession.

`$64,000 Question'

“Economic growth in the third quarter will surely be higher than it would have been,'' said Chad Stone, chief economist for the Center on Budget and Policy Priorities, a nonpartisan Washington-based group. Whether the rebates trigger enough spending to end the economic slowdown, “that's the $64,000 question,'' he said.

Taxpayers interviewed last week were less interested in the underlying theory than using the rebates to offset increased costs of necessities such as food, gasoline and shelter.

“It can help out, but it's still not enough to do much with,'' said Scott Davis, 44, a tradesman on strike at auto parts maker American Axle & Manufacturing Holdings Inc free credit report.com. in Detroit. “I'm going to be using it to pay bills: rent, electricity, water.''

For Sally Hamler, 56, a mother of three in Marietta, Georgia, the rebate will go for clothes and food.

“I'm thinking, a laptop or home improvements,'' said Chad Thomas, 40, a commercial property manager in New Ulm, Minnesota.

Home Improvements

Mark Caswell, 43, director of a communications team for BI, a privately held business consulting company in Edina, Minnesota, said he plans to renovate his family's house in Maple Grove, a Minneapolis suburb.

“The market is tough to try to sell your home, so we're going to try to fix it up,'' he said. “It's better to make improvements as we need.''

Others said they planned to use their payments to reduce credit card debt, which may hasten more spending later, according to economists including Stone.

“I am a poster child for the sub-prime mortgage mess,'' said Kim Souza 39, co-owner of Revolution, a clothing store in White River Junction, Vermont. “After Abu Ghraib, there was another stimulus check, and I felt really proud to endorse it over'' to the American Civil Liberties Union. “This time I'm going to endorse it over to Citibank or American Express.''

`Last Hurrah'

Squires, the wife of a soldier leaving for Iraq within months, tried starting a business to support her daughters, ages 3, 18 months and 4 months. The $1,200 rebate she expects will go to repay Mary Kay Cosmetics, a closely held London-based company, some of the $10,000 she owes for products she intended to sell — until her two older daughters “got into them.''

Other taxpayers said they would use the money for more discretionary spending.

Rachel Webber, 49, a legal analyst from Stockbridge, Georgia, said she will probably take her son, David, 17, to Walt Disney World on the family's first vacation since 2006. Fazy Kowsari, 36, a nurse from Maple Grove, Minnesota, said his rebate will help take the family to Iran to see relatives.

Fran Mannarino, 80, of West Windsor, Vermont, said she's heading for a vacation in North Carolina, calling it her “last hurrah at the beach,'' as long as the money “arrives in time.''

`A Pittance'

Carl Poole, 67, a retiree working part-time at an engineering company in Houston, said he'll get a new television. John Halsey, 41, an insurance agent in Macomb Township, Michigan, said he and his wife, Lisa, are planning to buy furniture for the first time in 10 years.

Several taxpayers said the rebates won't be large enough to make much difference to families or the economy, no matter how they are used.

“The government was what caused the problem, and they are going to bail themselves out with a pittance,'' said Bill Littles, 54, of Peterborough, New Hampshire, the owner of Steele's Stationery. “With all the billions and billions they are spending in Iraq and other places, and all they can do is throw the people a bone.''

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