Are the stimulus checks only a loan?

BY Business Desk  July 2, 2008 at 3:56 PM EST

Question/Comment: My accountant told me the government’s gift of money for taxpayers (to help stimulate the economy?) is actually a loan that most middle/upper income citizens will have to repay within a year.

Paul Solman: America spends more than it takes in and has been doing so for several centuries. The pace has certainly picked up in recent decades, except during President Clinton’s tenure, but it’s a longstanding “trend,” “habit,” “MO,” “SOP,” whatever.

If you spend more than you earn, obviously, you have to borrow the balance. (Or beg. Or steal.) Individuals use credit cards to borrow. Uncle Sam (or Aunt Samara, if you prefer), uses IOUs – Treasury bonds, notes and bills. So anything EXTRA that we spend – like checks to stimulate the economy – must be borrowed by issuing additional IOUs. Some will have to be paid back in a year (one-year Treasury bills) but most will have longer “maturities” and will be paid back at later dates. Treasury bonds are 10-year and 30-year IOUs.