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Thinking Christianly About Economic Stimulus Payments
- 05/01/08
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The Economic Stimulus Payment is on its way. In the coming weeks Americans will be receiving a check, courtesy of the government. Eligible people will receive up to $600 ($1,200 for married couples), and parents will receive an additional $300 for each eligible child younger than 17. This is going to be quite the windfall for many families.
John Piper recently wrote a short blog post he entitled Economic Stimulus Payment & Christ in which he encouraged Christians “to be radically creative and hedonistic” with this money. “Before the check comes dream of some person or ministry which might make much of Christ because you treasured him above your next home project. The reason God created money and enabled us to earn it is so that we could show by the way we use it that money is not our treasure, Christ is. That’s why the checks are coming. So we can make Christ look great.”
Because I live in Canada, the fifty-first state of the Union, I will not be receiving this payment. However, I did have a question about it. I began to wonder, as have others, whether Christians are in some way morally obligated to spend this money (thus stimulating the economy) or whether they can legitimately give it to one ministry or another or perhaps use it to pay down some high interest credit card debt. And that opened up a few other questions. I turned to David Kotter, whom you may know as the Executive Director of The Council on Biblical Manhood and Womanhood and a regular contributor to the CBMW Blog. Before turning to ministry and accepting his current position David taught economics and contributed to Wayne Grudem’s Business for the Glory of God (and this followed a stint as a finance manager for Ford Motor Company). He seemed an ideal candidate to answer a few questions about the intersection of theology and economics.
So I offer this primarily to my American readers (which is most of you, really) and hope it benefits you.
What is the purpose of the Economic Stimulus Package?
The Economic Stimulus Act of 2008 is primarily intended to remedy slower growth and address short-term economic uncertainties by allowing “Americans to keep more of their money to stimulate consumer spending,” according to the White House fact sheet. The assumption is that most citizens receiving a rebate check will spend it quickly on domestic goods and services. Since every purchase funds a paycheck for someone else, the hope is that the suppliers will in turn spend part of their added income on yet more products, and so on and so forth until there is a multiplied boost to the U.S. economy.
While not explicitly stated, this law also seems to be designed to give a boost to presidential and congressional approval ratings. When economic storm clouds are on the horizon in an election year, it is helpful for politicians to be able to point to something that they have done to help. Few things improve the mood of voters like receiving an check in the mail.
Is this a workable solution to an economic problem? Or is this merely a means to a very short-term rally?
Unfortunately, this stimulus plan fits the scenario of “robbing Peter to pay Paul.” A tax rebate is just the return of money that was previously taken from someone’s paycheck. While people receiving the checks may spend more, the workers who are funding the checks will certainly spend less. Even if the money is borrowed, it is borrowed from someone who won’t be spending. This offsetting effect is why Milton Friedman was fond of saying, “There’s no such thing as a free lunch.”
To use an everyday example, the price of corn has dramatically increased, and farmers have spent their growing profits on updated tractors, better hybrid seeds and other farm goods. On the other hand, people paying higher prices for food have less money to spend on other goods. The stimulus in spending in the agricultural sector is exactly offset by lower consumer spending in other parts of the economy. No free lunch here, nor with the tax rebate.
Nevertheless, there may be a small boost or short-term rally as money is taken from people who are more likely to save and given to others who are more likely to spend. According to the Internal Revenue Service, 97% of all federal income tax receipts were paid by half of the taxpayers with adjusted gross incomes above the $30,881 median in 2005. The other half of the taxpayers accounted for only 3% of tax receipts, and in fact 42 million paid no taxes or received net payments from the government in the form of funded tax credits. Under the Economic Stimulus Act, the people who paid little or no taxes will all receive maximum payments (not actually “rebates”). Higher earning taxpayers who tend to save more and pay the vast majority of income taxes will not receive a tax rebate.
In short, many people will receive a rebate from someone else’s taxes, and that makes it easier to spend more.
The government has earmarked this money specifically so Americans can pump the money back into the U.S. economy. The governments wants its citizens to spend this money and to spend it fast! Do you feel that there is a moral obligation to obey their wishes by spending this money?
The Stimulus Act does not explicitly require consumer spending with the checks, so Christians are not morally obligated to spend money quickly in order to be “subject to the governing authorities” (Romans 13:1).
But the law does rely on what the Wall Street Journal calls “The Splurge Urge.” People are more likely to spend newly found money, like an unexpected bonus or one-time tax credit, than they are to splurge with a hard-earned paycheck. For this reason, when the checks arrive Christians should avoid undue excitement and especially pray for self-control. Jesus specifically cautions, “Take care, and be on your guard against all covetousness, for one’s life does not consist in the abundance of his possessions” (Luke 12:15).
Is there a possibility that believers could negate some possible good that the government is anticipating?
Christians are sojourners and exiles in this world (1 Peter 2:11). Therefore it should not be a surprise to anyone that we do not fit into the mainstream of the national economy. Our values are fundamentally different and we are accountable to God for our financial decisions. Paying off debts and saving money is wise stewardship but not the best for the aggregate economy in the short term. Sending money from a stimulus check to a missionary overseas definitely will not boost the domestic economy in the way the government hopes, but it is still pleasing to God.
Over the long term, however, Christians generally make outstanding economic citizens who “work heartily, as for the Lord and not for men” (Colossians 3:23), subdue creation in their daily jobs, avoid lavish spending, give generously and save diligently. The overall economy would improve dramatically if everyone used the tool of money in biblical ways.
How should Christians think biblically about these economic stimulus payments?
For many Christians, they are actually being entrusted by God with the earnings of someone else. For other believers, this is simply the return of their own money and should be treated like any other financial stewardship. All of the typical considerations for wise stewardship should apply as believers give, save, and spend this money.
Hopefully, many believers are already living with a “wartime” mindset and are spending less than they earn. This stimulus check is simply more resources to be used for Kingdom work. John Piper was exactly correct in encouraging believers to use these rebate checks, and all other money of which they are stewards, to make much of Christ. Piper says,
Nobody in the world will see you spend your money on yourself and conclude that Christ is your treasure. They will assume you are just like them, no matter how loudly you thank God for this boon. It doesn’t mean you shouldn’t spend it on yourself (the way we do with most of what we earn). But everything we do can look different from the world — eat, pay utilities, fill up the car, wear clothes (even thrift store clothes). And yes, we hope (somehow) that spending on ourselves in some way contributes to our being more Christ-exalting people.
As Christian voters, we should not be fooled by fiscal maneuvers that take money from one group of people and give it to another in the name of boosting the overall economy. The economy only grows if more goods and services are produced, not when money is transferred from one person to another.
Finally, we can be grateful that economic stimulus plans are restricted to this world. The One who spoke the universe into existence and owns the cattle on a thousand hills does not need a plan to boost the domestic prosperity of heaven. Jesus Christ is the ultimate treasure whose glory will infinitely outshine any pleasure we might receive from a rebate check.
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Comments (24)
Statistics show that even Christians carry way too much personal credit card debt. Following the late great Larry Burkett's counsel, putting the rebate towards this type of debt would be a good option. And, once out of debt, the family could move the "debt repayment" money they spent on finance charges over to their local church ministry - assuming that a habitual lifestyle of overspending isn't in play.
And, once out of debt, the family could move the “debt repayment” money they spent on finance charges over to their local church ministry - assuming that a habitual lifestyle of overspending isn’t in play.
Even if they choose not to do that, it seems to me that lowering personal debt is as likely as anything to be helpful to the national economy...
I prefer this solution: http://www.theonion.com/content/news/congress_to_raise_alpacas_to_aid.
This economic stimulus payment can help fund the purchase of Lots' of bread, ham, cheese, bologna, and juice to feed to the homeless. And while they munch, we shall preach! And while we preach, may the Holy Spirit work on their hearts!
"Christians should avoid undue excitement"
Over between $600 & $1200?? Perhaps he's not noticed the cost of basic goods and services these days (also courtesy, I might add, of our Federal government's confiscatory tax laws and the money pit in Iraq that its gotten us into). That's only a couple of months of gasoline for a lot of families.
So, if I get $2100 for my family, and we only paid $1750 in federal taxes last year, maybe I should find someone who isn't getting anything, and give them the extra $350, and say, "Someone took this from you to give to me. I can't in good conscience keep such a 'gift', because my sin has been paid for at the unimaginable cost of the Son of God who loved me and gave Himself for me. Please do with it as you wish, but whatever you do with it, please praise in your heart the Savior who gives people hearts that refuse to enjoy someone else's sin."
That sounds good, doesn't it? My point is that we are missing that Jesus said that the government has the right to take its citizens' money. Startling to an American; isn't it? So the money that we get is not ours or someone else's but the government's.
I'm not saying we have to do what the government "hopes" we will do--I actually "buy" the argument that good stewardship makes better fiscal citizenship and that we should not use any money to buy anything that doesn't at some level serve the kingdom of Christ. But I think I'll "return" the argument that what we are receiving is someone else's money.
Thanks for the stimulating thoughts!
I love Piper's idea. We are undecided but my wife and I planned to pay the bulk of our daughter's Christian School tuition next year, in advance.
"How should Christians think biblically about these economic stimulus payments?"
Gee, I don't think he actually said anything "biblical" in his response. I think he's got a problem with taxes but beyond that, where's the Bible? Isn't it decidedly unbiblical to talk about the return of "their own money"? Isn't "our" money God's money? Aren't we called to pay taxes? I don't get the irrelevant segue into taxes.
Whatever you have, whether it's a tax rebate, your own income, your house, your possessions, your life, be a good steward. Nothing special about a tax rebate for a Christian.
"Unfortunately, this stimulus plan fits the scenario of “robbing Peter to pay Paul.” A tax rebate is just the return of money that was previously taken from someone’s paycheck. While people receiving the checks may spend more, the workers who are funding the checks will certainly spend less. Even if the money is borrowed, it is borrowed from someone who won’t be spending. This offsetting effect is why Milton Friedman was fond of saying, “There’s no such thing as a free lunch.”"
I think this might be a bit simplistic. This isn't an argument against the cheques or their virtues.
It is an economic principle that in order to stop recession a government must incur debt.
This idea that a "tax rebate is just the return of money that was previously taken from someone’s paycheck" may well be inaccurate -- the money may be borrowed from another country altogether.
In this case, it is tantamount to internal investment in the economy.
"The economy only grows if more goods and services are produced, not when money is transferred from one person to another."
This isn't what is happening with a stimulus cheque.
The problem with recession isn't the lack of economic growth. As I understand it this is a symptom.
The problem with recession is well stated in the term "stagflation."
Stagnant - LACK OF SPENDING AND INVESTMENT.
Inflation - Devaluing of currency/rising prices.
The Fed. Reserve tries to reckon with the latter via interest rates.
But the stimulus cheques attempt to deal with the STAGNATION of the economy.
Thus, it is short-sighted to decry them on the basis that the govn't is simply giving tax-dollars back (redistributing), (which may well not be the case). This misses the point.
Moreover, the GDP measures value added. The value added will increase with spending, irregardless of the source.
Economic growth is measured in terms of GDP. Ergo, more spending, more "growth." Again, not a legit criticism.
"To use an everyday example, the price of corn has dramatically increased, and farmers have spent their growing profits on updated tractors, better hybrid seeds and other farm goods. On the other hand, people paying higher prices for food have less money to spend on other goods. The stimulus in spending in the agricultural sector is exactly offset by lower consumer spending in other parts of the economy. No free lunch here, nor with the tax rebate."
This is disanalagous and confusing to the issue.
1) Economically speaking, there is a disanalogy between profit and taxes, which are taken out of your "profit." The taxes are a drag on the economy in the first place -- that is NOT said with a derogatory edge. The drag may well be needed in an overheating economy.
2) Combined with the "splurge urge" (see below), the temporary removal of this drag is not equivalent to standard feedstock supplier profits. The argument here is that others have to spend more because the feedstock price increases, while the suppliers have a "stimulus." But the stimulus package isn't increasing the PRICE of anything. There is no market here, where the suppliers get loaded and the demanders get burned. Hence, this example is disanalogous.
3) Not only so, but the statement seems loaded by the word "stimulus." This is supply and demand at work, not an injection - the injection of money returned from taxes (or foreign borrowing) isn't affecting the price of any particular market, whereas the demand for corn does exactly this, which the example illustrates.
On a side note, whoever thought it was a good idea to use crops for energy lacked common sense. The corn prices are connected now to ethanol production -- it is sheer lunacy to combine the feedstock of one stable market (food) with an unstable market (energy). Not to mention the negative return by using corn for energy. Wheatgrass at least gives a decent yield.
"But the law does rely on what the Wall Street Journal calls “The Splurge Urge.” People are more likely to spend newly found money, like an unexpected bonus or one-time tax credit, then they are to splurge with a hard earned paycheck"
And that is exactly the point - the "splurge urge" COUNTERS a fundamental problem in recession.
Saving is not a good idea with an impending recession.
Your savings may be reduced to dust by the inflation and stagnation, to which the consumer may contribute by saving in the first place. With a recession or the like impending, "stuff" is better than "cash."
Some thoughts:
Sending the money to missions is ethically questionable. The U.S. has debt. Odds are you have debt. Get out of debt (at least personal), then fund missions.
Where did the Scriptures ever condone incurring debt to fund missions?
The cheque may itself be borrowed (internationally). Internal (i.e., within the U.S.) is to be considered differently at a national level.
On a side note, one of the (increasingly diminishing) strengths of the U.S. situation was that despite the massive debt, the majority of that debt is INTERNAL. On the other hand, around 50% of canadian debt is foreign held.
cf. New Zealand, early 90's for an example of what this leads to.
You can spend money on "stuff" without engaging in greed or covetous.
Treat 100 homeless for lunch at a fast food joint. Buy your church a spare projector bulb. Buy some textbooks for your child's school.
Thankful for the thoughtful and Biblical post, especially the God-glorifying statements.
Oh, what a joy! Thankful for Piper's reminder for us to "make much of Christ."
An idea: Southern Seminary estimates that a typical semester's tuition and fees is about $2226 (half for a Southern Baptist student) [http://www.sbts.edu/admissions/Tuition.aspx]. A married couple could donate their cost to supply a full semester's tuition for a SBC student, or half the tuition for a non-SBC student.
I'm gonna just say: I already bought something even though I haven't gotten the check. I bought a bike that cost roughly the same amount as I will get in a month or two. Now my gf and I can go biking together. I'm not in debt, I don't consider myself a big spender...but I do believe that I will glorify God with my new bike.
Very thought provoking, as money issues always seem to be. Still havn't figured out what to do with my five talents, but I know I'm not gonna bury them.
I'm going to leave mine in my Savings Account praying God will give me wisdom where to share part of my blessings. I'm not in need of stimulating riches on earth.
Hi Tim.
I wish the money had been spent on creating projects that create jobs that could have had a lasting positive effect on the economy. This is a shortsighted solution (not sure I could even call it a solution). It's more like a Band-Aid on a compound fracture. We are suffering the inevitable consequences of a fuel driven society that is spreading worldwide. We are turning farms that could feed the world into corn squeezins’ for drunkard (read under 13 mpg) heathens (read inefficient vehicles).
I'm not sure we need a shot of painkiller every time we have a sore toe. Pain is there to make us take corrective action. We still haven’t hurt enough to be motivated us to make changes in lifestyle and life commitments.
That said, more importantly, I believe the church needs to be focused on giving out the blessings that Jesus originally promised to the oppressed. I wrote more about that here:
Never a Recession in Authentic Blessings
I think Canadians are jealous...
I think that this is a disguised form of Socialism and financial redistribution and I am a bit ashamed that Republicans have been pushing this. This is a shameless attempt to raise ratings before the November elections.
That being said, we should apply the same Biblical principles to this money than we do to any other money. Whether you receive money in a paycheck, get a tax refund, get a gift, and benefit from America's latest movement toward Socialism, we should be treating it as financial resources that God has entrusted us. I don't see why this should be thought of as any different than any other money we might receive.g
Thanks, Tim, for thinking of something that's very much on the mind of us Americans.
Our check will go directly into the savings account awaiting this year's property tax bill; we are so relieved to be getting it. (Note the semi-colon.) We look at is as a gift from God, which it is. While that may not be what Uncle Sam is hoping we'll do with it, there will be a slower and trickle down effect that amounts to the same thing. If it weren't for that money we'd be scrimping up every spare penny on payday and socking it away. This "stimulus" frees up that spare change for all those other little expenses throughout the month - expenses which in our case are often gospel related since we take care of much of our little church's office-type work here in our home.
Larry says, "Over between $600 & $1200?? Perhaps he’s not noticed the cost of basic goods and services these days (also courtesy, I might add, of our Federal government’s confiscatory tax laws and the money pit in Iraq that its gotten us into). That’s only a couple of months of gasoline for a lot of families."
We are by no means wealthy by American standards. My husband delivers produce and I clean houses and run a home-based business. We both work hard and are still eligible for most low-income government assistance programs should we need them. From my perspective I can say that that check is the largest sum of money many people will hold in their hand at one time for a very long time, that isn't already earmarked for rent or whatever. The increased price of fuel has seen to it that many low income people no longer have any discretionary income at all. (And these are the very people who can least afford whatever it will cost to replace their inefficient old gas hogs.) All that to say, for some people - possibly the majority of Americans - this is a lot of money. Many people are very excited.
So, as low-income believers in Christ, by God's grace, we'll use it responsibly and in as Kingdom oriented a way as we use any other money we receive on any other day. And that is how I would advise anyone else in my circumstances.
I bought a new gun $70.00; I'm going to buy a new yard roller $200.00 (both American made) and the rest of the $$$ will go in the savings account.
This rebate is a bandaid... the real bombs are the national debt, (which is almost $31,000 for every person in the USA) and our soon to be bankrupt Social Security system.
Please ask David Kotter about the national debt and our SS system and what he thinks they hold for America.
(Groan)...I really don't have a dog in this fight, being one of those evil, risk-taking capitalists who is robbed annually of exhorbitant amounts of money by my fellow citizens (er, my government, I mean). No rebate for you, my rich friend!!! So to those whose income taxes are being returned to them -- good on you!! What to do, what to do......To the 50% of Americans who pay no income taxes at all, here is a simple suggestion: burn the check, it's stolen property. Or better yet, return it to those from whom it was stolen.
How best to practice "good stewardship" with another's assets? Now that's a subject that might be worth exploring....
Yes...those thoughts have been brought to mind ~ yet we are also to be minded of Titus 2 and Romans 12 & 13 and even 1 Peter 2:17-18. As MacArthur's Study Bible reads on vs 18 ~ "One's Christianity does not give the right to rebel against one's superior in the social structure."
Reading from the DESCRIPTION OF THE “ECONOMIC STIMULUS ACT OF 2008” Scheduled for Markup by the SENATE COMMITTEE ON FINANCE on January 30, 2008 Prepared by the Staff of the JOINT COMMITTEE ON TAXATION January 28, 2008 JCX-8-08.....
"The Provision includes a stimulus rebate credit for 2008. The credit mechanism (and the issuance of checks described below) is intended to deliver an expedited fiscal stimulus to the economy."
Send the money back if those receiving don't have integrity to use according to the given intent? Is it sin to use it for the intent? Or defy the "king" and decide not to help do good to others that can have jobs to provide for their families even in the short term and via a bandaid through goods or services being purchased? Is defiance speaking back and pilfering rather than showing all good fidelity spoken of in Titus 2? Kinda like dad giving me money from my future inheritance to love in a way that financially supports my neighbor that desperately needs his job to put food on the table and I instead buy them a Bible and tracts and commentaries? Can we store treasures in heaven by giving a drink of water and food via shopping in the name of Jesus?
Not said to be perceived as being malicious nor am I throwing out that folks don't have integrity ~ this just involves so many facets and clearly it can be overwheming to take them all for weighing in even with the utmost respect of those of spiritual authority. This can boggle the mind in Biblically discerning? Even slaves are to prosper an earthly kingdom, as did Daniel and Joseph, as unto the Lord and to the glory of God. Now if the king simply hadn't clearly told us a well-defined "intent", wouldn't this be so much easier? I'm thankful for the post and comments here that certainly will help in our family's decision.
Fiscal stimulus is pretty much a religious belief advocated by the priests of John Maynard Keynes (who have been gradually discredited by Nobel laureates since the stagflationary 70's).
We are upset that our fiscal blanket is not keeping us warm enough, and so we cut off the bottom to sew it to the top ... and we end up with an even shorter blanket.
I was glad to see the truth of "no free lunch" included your the great essay.
The time, energy, and money that has gone into deliberating and implementing the legislation across the branches of government, follwowed by the processing the checks by government, people, and banks ... that adds up to real time, effort, and money that could have gone somewhere better than distorting our economy further than it already has been.
Keynes worshiped bigger government. In the German translation that he sent to the Third Reich in 1936, he expressed that his General Theory could be best utilized in the totalitarian state.
Keynes' legacy continues today, where I find that I agree with my fellow Christ-followers that we must see the needs of the poor and oppressed. Yet it seems that the individual and the church are called to directly bandage the wound, feed the hungry, and clothe the naked--while many believers feel we should outsource it to an ever larger government. In so doing, our policies may be driven by a wholesale disobedience of the Tenth Commandment, that is to say, by ultimately comparing one's possessions with another's to drive public policy. To me, this is neither biblical nor constitutional.
In order for the church and the family to rise, the state needs to shrink. There are some things that the state does the best (or else God would not have anointed state leaders, even Pontius Pilate), such as protect individuals' rights and property. But I do not see the effectiveness of the state in building hospitals and universities, as the church used to be in the habit of doing (when the government was much smaller).
Interesting post. As a self employed person who pays all my taxes after actually seeing the money myself, it's clear to me that I'll be using any check like this to start paying taxes again. It's a very small amount of money compared to the amount I pay every year in payroll and income taxes.