Many residents plan to pay bills with federal rebate check

Bangor-area residents are beginning to think about how they will spend the tax rebates President Bush signed into law Wednesday, and many seem to be sure of one thing: They will not splurge on themselves.

The $170 billion economic stimulus package will send at least $300 to almost everyone who earns a paycheck or receives Social Security or veterans benefits. People paying income taxes could get up to $600 per individual, $1,200 per couple and $300 per child. Checks or automatic deposits are due to arrive beginning in May.

In order to receive the rebate, families must file taxes for 2007. That includes senior citizens who do not normally file taxes.

Congress and the president pushed through the stimulus package in hopes that Americans would go out and spend the extra money and help jump-start the ailing U.S. economy.

But an informal survey conducted in Bangor and Brewer on Thursday morning found that most people interviewed plan to save the rebate money or use it to pay bills rather than indulge on a coveted item.

“I’d really like to do something for myself, but I’ll probably pay bills with it,” said Eric Brasier, a 35-year-old assistant manager at the Hannaford Bros. supermarket in Brewer. “My wife would like to take a trip to New York, so maybe we’ll do that.”

Brasier is married with one child, and believes he will receive a check for $1,500.

Alan Townsend, a 27-year-old Brewer resident who works as a dishwasher, said he plans to save his rebate and “spend it sparingly.”

Mary Ellen McTigue, a retired Holden resident, had the same intention.

“I’m going to put mine in the bank,” she said.

Scott Phillips, a 44-year-old Veazie resident and truck driver, and Andrew Carter, a 42-year-old Dedham resident, were sure they would use the rebate to pay bills.

“I’m trying to get caught up on bills. That’s all you can do,” Phillips said.

Carter doubted the stimulus package would have a significant effect on the national economy.

“I think it’s a drop in the bucket. People are so maxed-out already. Most of us are going to spend it on bills,” Carter said.

Laura Betters, 30, a stay-at-home mother of two, said she and her husband have talked about using their check to purchase an additional heating source, such as a pellet stove, for their home in Old Town.

Mark Hall, a 45-year-old Maine golf professional, questioned whether the federal government would actually disburse the checks as promised.

“I won’t believe it till I see it. For me, it’s a car payment. We all hear, ‘The check is in the mail,'” Hall said.

Nicholas Epley, a professor of behavioral science at the University of Chicago Graduate School of Business, has made national news recently with his argument that to really increase consumer spending, the rebate checks should have been called “tax bonuses” instead.

In a Jan. 31 New York Times op-ed column, Epley described research he conducted with colleagues at Harvard University that shows people are more likely to spend a bonus and save a rebate. In their study, half of the participants were given $50 and told it was a bonus while the other half were told it was a rebate.

When unexpectedly contacted one week later, participants who got a “rebate” reported spending less than half of what those who got a “bonus” reported spending.

Matthew Nye, a financial adviser at TMATT Tax & Financial in Bangor, said that the last time the federal government put forth a similar economic stimulus package, in 2001, many of his clients who said they would save the money ended up spending it.

“I think it will help the economy in the short term. It helps to see the government is taking the necessary steps to avoid a recession,” Nye said.