The whole point to injecting billions of dollars into the economy is to inject billions of dollars into the economy. The reason congress made the allocations it did was to ensure that this money would not be saved. That's not to say that anyone would be happy with later reports of foolish expenditures. In fact, the Obama administration in recent days has warned States receiving this boon against creating irresponsible programs or using the funds in ways that might later offend taxpayers.
Upper-Mid to Upper income taxpayers will see no benefit from the stimulus money precisely because people in those tax brackets would be more likely to put the extra money away while those in lower income brackets would be more likely to go out and buy that new IPOD.
Oregon is now looking at a budget deficit in the current fiscal year of $852 million dollars. Over the next two years that figure balloons to $3 billion. The Governor has suggested what he calls the 20-40-40 plan which combines the federal stimulus money with the rainy day fund and the education stabilization fund. The Governor says we don't touch the rainy day money to cover this fiscal year that ends June 30th. He will veto any legislation that does so. He suggested 20% of the federal dollars go to shore up the budget and then liquidate the rest over the next two years taking 40% of remaining funds in each of the upcoming fiscal years. This is prudent and reasonable. Unless you want the federal stimulus money to actually do what it is intended for.
The Governor will squeeze the legislature into proposing new taxes and fees rather than use the bailout as it was intended. Oregon will become a very expensive place to live. That will have long term economic effects. North Dakota anyone?
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