Stimulus Program To Increase Federal Deficit

None by Eric Ray

(KCPW News) The federal government began sending out stimulus payments yesterday. While the extra money will come in handy for recipients, experts say the plan could cause future economic issues.

"It would be nice if the government were tapping into its own rainy day fund, but unfortunately this is all borrowed money," says Jeff Thredgold, chief economist for Zions Bank. "It helps the economy a little bit in terms of spending, but it also about doubles the size of the budget deficit this year."

Thredgold says this year's federal budget deficit will likely be over $400 billion, flirting with being the largest ever. He says the slowing economy, higher unemployment, and the stimulus program are partly to blame for the growth of the deficit, which was $162 billion last fiscal year.

Thredgold suggests three ways to use the stimulus payments - spend it, pay off debt, or save it.

"All three choices ultimately are beneficial to the consumer. It's just one has a more immediate impact to the economy and that is in fact spending it," says Thredgold.

Stimulus payments will be sent to people who filed a 2007 federal tax return. Individuals may receive up to $600, married couples up to $1,200, and eligible parents will receive an additional $300 per child under 17 years of age.

To hear more from Thredgold, tune in to Midday Metro today at 10am.

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