The Great Stimulus Lie…

As we all sit by and watch life unfold around us during this hard time, it is difficult to ascertain what is correct and what isn’t.    So many news outlets say different things that one does not really know what to believe or who to believe.  Compelling arguments can be made on both sides of the political dog fight and the news media is a willing participant or a hired accomplice.

Since the start of the stimulus conversation, everyone in the world assumed that such stimulus was akin to the Quantitative Easing and programs enacted under the Obama Administration to stem the tide of the Great Recession.   While individuals did not receive emergency stimulus from the federal government during the Great Recession, the banks and other institutions did in order to stop the unthinkable, which was an actual depression. 

Fast forward to 2020 and we find ourselves in limbo having pulled the emergency ‘rip’ cord on the economic train that was driving the country’s growth.  The problem is once again systemic, as it is global in nature as most countries have shut down for some period. 

Consider the difference in accidents.   You slightly pump your brakes to avoid hitting the car in front of you, or two feet in front of you a truck stops.  Two completely different outcomes.  In the second example you slam on your brakes, swerve to try to miss the truck, but hit it anyway.  Damage is inevitable as you have come to an abrupt stop.   The sudden nature of the stop is what makes the effect much worse than it could have been.  The same is true economically, right now.

But in this situation, a virus that originated overseas that has since kept everyone locked away for a month or so and wiped out billions in value.  Millions of people in the United States are out of work or furloughed.   Companies are applying by the millions for the SBA sponsored loans and payroll protection but cannot seem to get money or answers. 

The Ribotsky Institute recently spoke with several small business owners, who we believe are the engine that really drives the economy.  These business owners have had their businesses turned upside down as they are not allowed to operate, have bills and costs as well as no foreseeable future.   Will their business come back? Will people be allowed to shop and purchase again?  What will people spend money on? What is to become of all of the people out of work if the economy that employed them doesn’t come back?

As they all try to grab a piece of the stimulus package worked out by the Trump Administration and Congress, they are left with uneasy and dire feelings.   The same goes for the rest of the population waiting on their direct deposit of stimulus money.   

But wait, the dire consequences get even worse everyone.   You see the stimulus check you think is help from the federal government is a blatant lie.   It is, after all a nice idea poorly executed.   The stimulus money is really just a re-fabrication of IRS rules that is allowing the IRS to advance you tax refund money you may be eligible for in the next tax year.  Yes, that is right ladies and gentlemen.   So do not go spending that stimulus check so fast, even though those of you not making any money will most likely have to.  

Take a look at the actual language from the “Coronavirus Aid, Relief and Economic Security Act” or “CARES Act”:

DIVISION B—RELIEF FOR INDIVIDUALS, FAMILIES, AND BUSINESSES

TITLE I—REBATES AND OTHER INDIVIDUAL PROVISIONS

SEC. 2101. 2020 RECOVERY REBATES FOR INDIVIDUALS.

(a) In General.—Subchapter B of chapter 65 of subtitle F of the Internal Revenue Code of 1986 is amended by inserting after section 6427 the following new section:

“SEC. 6428. 2020 RECOVERY REBATES FOR INDIVIDUALS.

“(a) In General.—In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2020 an amount equal to the lesser of—

“(1) net income tax liability, or

“(2) $1,200 ($2,400 in the case of a joint return).

“(b) Special Rules.—

“(1) IN GENERAL.—In the case of a taxpayer described in paragraph (2)—

“(A) the amount determined under subsection (a) shall not be less than $600 ($1,200 in the case of a joint return), and

“(B) the amount determined under subsection (a) (after the application of subparagraph (A)) shall be increased by the product of $500 multiplied by the number of qualifying children (within the meaning of section 24(c)) of the taxpayer.”

As you can see in Section 6428 above the actual advance you are getting is not really money to you, you will have to pay this back next year.   Which was never properly explained to anyone out there when the bill was passed.   Not Republican.  Not Democrat.  NO ONE.   (BOTH PARTIES ARE COMPLETELY TO BLAME HERE)

The first hint to us here at The Ribotsky Institute was that the media wasn’t making a big deal about this large government spending and who was going to pay it back.   TRILLIONS OF DOLLARS.  As a matter of fact, the popular media has said next to nothing about this fact.  

Now it cannot be because they do not understand it, because they seem to pick apart and “FACT CHECK” everything that President Trump does or says.  So where was the investigative reporting on this little tid bit? 

So, this “RELIEF FOR INDIVIDUALS, FAMILIES AND BUSINESSES” is nothing more than a loan against your future tax revenue.  Ingenious actually and makes it so that the government is not actually laying out anything.   But that is the actual point.   This is supposed to be the government helping everyone not just those who are better off.  Not just big business.  Not just those who do not need it.    And it is nothing more than a lie….

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