Facts about the stimulus package
House Speaker Nancy Pelosi of California announces the proposed economic stimulus package worked out between the Bush administration and the House today as House Minority Leader John Boehner of Ohio, left, and U.S. Treasury Secretary Henry Paulson look on.
TEXT OF INTERVIEW
Tess Vigeland: As you've probably heard by now, Congress passed an economic stimulus package this week. $168 billion worth of rebate checks for everybody!
Ok, not everybody -- we'll get to that in a minute -- and it's also got some tax breaks for businesses.
All of this, of course, is meant to inject some spending into the economy as it slouches toward recession. Or are we already in one? Nobody seems to have a lock on that answer.
Anyway, Marketplace's Nancy Marshall-Genzer is with us from our Washington bureau and she's got all the details:
Vigeland: Hi Nancy.
Nancy Marshall-Genzer: Hello Tess.
Vigeland: So let's get right to the question most people want to know: how much is Uncle Sam sending me?
Marshall-Genzer: Well, it's a fairly substantial chunk of change, Tess. It's $600 for individuals, about $1,200 per couple, and disabled veterans and seniors and other low-income people who have a certain amount of income get $300 and you get $300 per child in your family.
Vigeland: So, if you have, say, six children, that's another $1,800?
Marshall-Genzer: Yes it is, so get busy Tess. Apparently, children are, indeed, cheaper by the dozen.
Vigeland: But Nancy, there are some income limits, right?
Marshall-Genzer: That's true. Now, if you're an individual making up to $75,000 per year, you will get an refund check and the same thing is true if you're a couple making up to $150,000 a year, then you also get a refund check, but people making more than that will still be getting checks, but they'll be a lot smaller.
Vigeland: Once you hit those income limits, you're going to get less from the government, but you'll still get something?
Marshall-Genzer: Exactly. It's sort of like a phase out: the more you make, the less you get.
Vigeland: OK. And, Nancy, when might these checks be in the mail?
Marshall-Genzer: Well, they're not in the mail yet, Tess. It'll be sometime this spring, probably around May.
Vigeland: Presumably because the IRS is a little busy with other things right now?
Marshall-Genzer: Yeah, there's something called April 15 coming up Tess -- my favorite day of the year.
Vigeland: Of course, of course.
Marshall-Genzer: Of course. Now, these rebates are going to be based on our 2007 tax returns, so there is an incentive to file early, right? But the IRS, of course, has to wait until all those 2007 tax returns are actually in after April 15.
Vigeland: OK. Now one question that we've had already leading up to the idea of a stimulus package is folks have been wanting to know if they will be taxed on the stimulus check that they receive in the mail next year.
Marshall-Genzer: You know Tess, that is an excellent question. I called the IRS and they said "um... we can't talk about that just yet" -- they said they would get back to me. But, then I called my very wonderful, very patient CPA who does my taxes and he said he didn't think that we would be taxed on these rebates, because this is money that we've already paid in just coming back to us.
Vigeland: Right. And Nancy, tell us briefly about another element of this bill that could affect our personal finances, which is some changes that are being made to the limits on what kinds of mortgages are backed by Fannie Mae and Freddie Mac.
Marshall-Genzer: Well, Tess, you may remember Fannie Mae and Freddie Mac had some accounting scandals come out of the closets a while back, so they have been under some pretty strict regulations. This economic stimulus package would lift one of those regulations that had said "OK, Fannie Mae, Freddie Mac, you can't back any loans that are worth more than $417,000. Now Tess, where you live and where I live in Washington, DC, the average house is a lot more than $417,000.
Marshall-Genzer: So that kind of shuts us out when we apply for a loan. This'll help people like us.
Vigeland: Or at least it means that we have to pay more than someone else might who is under that limit.
Marshall-Genzer: Exactly, unless we can put a heck of a lot of money down. So, this is going to help people like us in really expensive housing markets actually be able to buy a house.
Vigeland: OK. And finally, when does the president plan to sign this legislation?
Marshall-Genzer: Probably sometime next week.
Vigeland: Marketplace's Nancy Marshall-Genzer, thank so much for a stimulating review of this bill.
Marshall-Genzer: You're welcome.
Vigeland: By the way, the new limit on those Fannie Mae and Freddie Mac mortgages we mentioned will go as high as $729,750 in expensive parts of the country like here in California.