The phrase of the week is “economic stimulus.” Several efforts are being made to save the economy and try to prevent a recession. On Tuesday there was an emergency Fed rate cut, designed to help inject confidence into the stock market and that will provide relief for those with ARMs. Additionally, this week it was announced that bond insurers will also likely get help in the form of a bailout. And the biggest of these measures is, of course, the tax rebate.

This tax rebate was announced yesterday. The Seattle Times reports on some of the details of the tax rebate:

Individuals with adjusted gross incomes of $3,000 to $75,000 would get rebates worth $300 to $600. Joint filers with annual incomes up to $150,000 would receive up to $1,200. Individuals and families that earn more than those limits would get rebates that decline as their incomes increase. Families also would get bonuses of $300 per child, except for families that earn more than $186,000.

But will this really help the economy? While the idea of “free money” seems appealing, the fact of the matter is that the money isn’t actually free. Someone has to pay for it. Last time this happened, the Bush Administration worked out a deal with Congress in which the money was “borrowed” from Social Security. We all know who ends up paying for that.

This time, details on where the money will come from have been murkier. But it will still have to be paid back. Which means that it will show up as a cost somewhere down the line.

Another issue to look at is the fact that this may not help the economy long term. The last “economic stimulus” tax rebate didn’t really change things. Look at us. We’re in the same place we were then. Why would this actually change things during this tax rebate?

And, as far personal finances are concerned, the tax rebate won’t be that much help. Most people don’t use tax refunds and rebates on things that would help their finances, like paying down debt and investing or saving. And the government is pushing Americans to spend that money in order to “stimulate the economy.” So while there may be a boost later in the year to the economy, the long-term effects likely won’t be that great.

Tags: home equity loan, home equity, home mortgage loan, home equity second mortgage,
second mortgage, debt consolidation home equity, home equity line of credit

Tags: fix mortgage crisis, foreclosures 2007, home mortgage loan, mortgage lenders, mortgage loan blog, mortgage rate freeze, resetting ARMs