Tax rebate smackdown: President Bush vs. Suze Orman

This one is a bit off topic, but it caught my eye and I thought I'd pass it on because so many of you have commented on the nation's addiction to consumer debt.  President Bush says he expects Americans to spend their upcoming tax rebates, to help the economy: "These rebates will begin reaching American families in May.  And when the money reaches the American people, we expect they will use it to boost consumer spending, and that will spur job creation, as well."

Personal finance guru Suze Orman (pictured) is advising, "Stash it, don't cash it": "The rebate you're about to get should be saved, not spent. It should be used to pay down debt and build up an emergency savings account. If you listen to Washington and spend the rebate, and we still slide into a recession and you get laid off, don't count on extended unemployment benefits to help you weather the storm -- that provision didn't make it into the stimulus package."

Thoughts? Comments? Email story tips to peter.viles@latimes.com.
Photo Credit: NBC

Comments

[Jack]

Laker, no financial institution in the US is paying 4 percent now for a MM. You may be seeing that rate on your recent statement, but many/most MMs show the rate as of the *end* of the *last quarter*, specifically December 31, 2007, on statements when such "disclosure" benefits them. You need to look at the rates being quoted *today*. Your MM has a ticker symbol; that will tell you the REAL rate, not this outdated 4 percent wishful-thinking rate.

According to iMoneynet.com, which tracks the country's highest MM rates at any one time, the highest available MM rate *today* is 3.66 percent at both Dreyfus and Morgan Stanley. Vanguard is third-ranked at 3.61 percent. Click on the URL with my name and you'll see the iMoneynet.com rate quotes, which you can bookmark and check every day.

[Rich]

Your $600 individual refund is 1.3% of the $45,000 California median income. The drastic decline in the dollar over the last month has boosted inflation by about that amount, to about 4.5%. Consider your refund spent, though stashing it away in order to stabilized cash flow is the best possible advice for the average person (although Jim Cramer is still correct that at this moment "cash is trash". The savvy investor needs to ditch dollars right now and turn them into just about anything else, including the tv you were going to buy anyway...)

[Wes]

Suze is right. It is in your best interest to save the extra money. However, Bush is also right. It is in the economy's best interest if you spend it. These 2 things are true with EVERY dollar you make you though. This stimulus program is no different.

Also, Bush is right that lower taxes stimulate economic growth. However, since he knew the democrats wouldn't OK another tax cut, this was the best he could do. It is a compromise.