Don't Take That Rebate Check to Wal-Mart

4 Better Things To Do With Your Windfall

Wal-Mart is waiting for your check.

The world's largest retailer, which made $819,976 in sales every minute during the fourth quarter of its 2007 fiscal year, is expecting to see you walk through its doors with an IRS rebate check in your hands. But there is a more patriotic thing you can do.

Beginning this May, the U.S. Treasury will start sending "economic stimulus payments" to more than 130 million Americans. The vast majority of individuals who qualify for a stimulus payment will not have to do anything other than file their 2007 individual income tax return to receive their rebate. In most cases, the payment will equal the amount of tax liability on the return up to a maximum amount of $600 for individuals ($1,200 on a joint return) and a minimum of $300 for individuals ($600 on a joint return). The government made the same deal with taxpayers back in 2001, when the Treasury sent "advanced payment" checks of $300 to single tax filers and $600 for joint filers.

When you spend your rebate check at America's signature retailer, you are responding to the government's stimulus like a true patriot. In a speech five days before Christmas of 2006, President George W. Bush said, "A recent report on retail sales shows a strong beginning to the holiday shopping season across the country -- and I encourage you all to go shopping more."

The White House/Congressional economic stimulus package should be labeled for what it is: the Wal-Mart/Beijing Welfare Subsidy of 2008. The "stimulus" plan is an income transfer program from the U.S. Treasury, to Wal-Mart, and from there to its chief trading partner, China.

Wal-Mart issued a press release shortly after the tax rebate passed applauding "the President and Congress for recognizing the economic struggles of everyday Americans and moving quickly to provide much needed tax relief." But the real relief is going to Wal-Mart.

Here's how it's supposed to work: The American taxpayer takes this windfall of discretionary income, drives to Wal-Mart, and buys another MP3 player made in China. Much of the Treasury's investment passes to the Walton family, and to their sweatshop vendors in Guangdong Province.

In an interview with Reuter's, Wal-Mart acknowledged that the tax rebate will trigger a "rapid response" at their check out line. "I would like to think that, as in the past, we have gotten at or more than our fair share of our checks," Wal-Mart's Chief Financial Officer Thomas Schoewe told Reuters. This Treasury infusion is a downpayment on Wal-Mart's estimated $9 billion worth of direct imports from China this year, not counting its indirect imports. The American consumer is just a pass-through.

One of the groups that lobbied the hardest for this "stimulus," the National Retail Federation, estimated that 41% of the checks being mailed this May will be spent. This cash injection is supposed to jump-start the economy. But when spent at stores like Wal-Mart or Home Depot, it won't create more jobs, or higher wages, or even more American production. It will simply rise to the top management, or be exported overseas, where inventory procurement occurs.

A 2005 study by the Economic Policy Institute, U.S.-China Trade, 1989-2003, found that America's growing trade deficit with China has had an increasingly negative impact on the U.S. economy, triggering job losses in the manufacturing sector in every state in the nation. The EPI study found that 1.5 million jobs were lost to lower-wage Chinese competition in the 14-year period between 1989 and 2003. During this period, the U.S. trade deficit exploded twenty-fold, like Chinese fireworks, from $6.2 billion to $124 billion. In the month of January 2007, the U.S. trade deficit with China stood at -$21.27 billion, or -$255 billion annualized.

The EPI study noted that the pace of job loss has more than doubled since China entered the World Trade Organization (WTO) in 2001. China's exports to America of sophisticated electronics and communications equipment requiring skilled labor are growing much more quickly than its exports of low-value, labor-intensive products. "Everyone knew we would lose jobs in labor-intensive industries like textiles and apparel," one EPI researcher said, "but we thought we could hold our own in the capital-intensive, high-tech arena. The numbers we're seeing now put the lie to that hope -- as China expands its share even in core industries such as autos and aerospace."

"Right now," says Mike Duke, Vice Chairman of Wal-Mart's International Division, "in many markets of the world, particularly mature markets, the consumer is under a lot of pressure. We are perfectly positioned for this time."

But what if Americans don't take their Treasury check to Wal-Mart? Here are 4 better alternatives:

1. Put It Towards Your Credit Card Debt: According to the Federal Reserve's most recent Survey of Consumer Finances (SCF), about 76% of U.S. families carried some form of debt in 2004. The first thing Americans should do with their rebate is pay off their plastic debt. Outstanding debt on bank-type credit cards rose from $181 billion in 1991, to $645 billion in 2004. This debt is a drag on our economy, and every patriotic American family should first strive to wipe out its own red ink.

2. Save it: A survey conducted at the University of Michigan, found that only 22% of households in 2001 said they would spend their Treasury rebate. Other consumers said they would either save the money or use it to pay off debt. Personal saving jumped in 2001 by precisely the amount suggested by the survey results. The Michigan study said that since they were mainly saved, the 2001 advanced payments provided little stimulus to the economy. The personal savings rate in America hovered just around 0% in 2007---the lowest level in the last twenty years. According to the University of Michigan report, "Direct evidence on consumption and investment spending in response to the (2001) tax changes suggests that these policies provided only modest stimulus."

3. Spend it locally: Money spent on local merchants recycles 7 or 8 times more productively than money spent at national chains. Your dollar recirculates only if its stays local. When it gets wired overnight to corporate headquarters, it has been extracted from the local economy as if it had been strip-mined.

4. Donate it to a local charity: You can help needy people in your hometown, and claim your donation as an itemized deduction to lower your taxable income to the IRS. This is at least a more honestly-earned tax break, instead of the retailer-inspired plan developed by the White House and Congress.

President Bush wants you to "go shopping more," and Wal-Mart has more than 4,000 U.S. locations to take your check. But it would be more patriotic to reduce your own personal debt, or boost your own personal savings, rather than let a multi-national corporation spend it for you in China.

Al Norman is the founder of Sprawl-Busters, and the author of "Slam Dunking Wal-Mart."

Comments

[drkazmd65]

Very well put Mr. Norman!

I was already planning on doing some combination of saving my rebate, paying off one of the wife's store charge cards (with an outrageous interest rate) and paying a local contractor to paint the facade of the new (to us anyway) house.

It would be stupid, and un-American to spend a dime of it at Wal-Mart.

Excellent article!

[Boboday555]

You're a ProudLiberalDemcorat?
Ya' sound like a Wal-Mart greeter to me but, I'll answer your question.

Wal-Mart is bad for America because it ships our manufacturing jobs to a country that has no human rights to speak of and, while the money spent at Wal-Mart makes the Walton family immensely wealthy the poor people who actually work at Wal-Mart have to have much of their healthcare subsidized by United States Tax Payers despite the fact that many work over 40 hours per week and many managers are forced to work overtime for no pay at all and against their will.

Wal-Mart is bad for America because while it gobbles up Mom and Pop operations, who dutifully paid their taxes each year, Wal-Mart and its scores of lawyers and accountants do all in their power to avoid paying those same taxes.

Wal-Mart is bad for America for many reasons but the main reason is that it doesn't sell Americans made goods.
American goods that come with all those regulations designed to safeguard Americans from buying harmful products.
Instead Wal-Mart sells goods made by Chinese companies that have no regulations to speak of resulting in children"s toys being painted with lead paint as well as the Aqua Dots fiasco that resulted in children"s candies being laced with a chemical that you can find in your favorite date rape drug.
That in a nutshell is why Wal-Mart is bad for Americans and America!!!

Got any other questions Mr. Wal-Mart Public Relations person?

[LeftRight]

"...the Aqua Dots fiasco that resulted in children"s candies being laced with a chemical that you can find in your favorite date rape drug...."

You are correct in your whole post, except this one line. Aqua Dots aren't candies, they were toys.

[ProudLiberalDemocrat]

In the aggregate, cheaper costing products are better for the American public.

I love folks like you, Boboday555, who enjoy complaining about the big-bad corporations when it's convenient. But do you think that your local diner (Mom & Pop shop) can sell a hamburger for $1 like McDonalds, Burger King & others? Big business can feed more people because of the economies of scale. You'd prefer people starve so as to save the Mom & Pop Diner. You'd prefer people starve, than eat a $.99 box of mac-n-cheese made by Kraft (try making the pasta yourself, by hand). And you'd probably prefer people starve than have Monsanto making more productive seeds to feed the drought nations of Africa. Bully for you, caring about Mom & Pop Grocery store. Mom & Pop are two people in Middletown, USA and they might employ a few folks (and maybe give them healthcare too; doubtful). But at the expense of saving their livlihood, you'd prefer that the rest of us spend more for milk & baby diapers. You'd prefer that we dismantle the internet because Amazon sells books cheaper than the little shop in your neighborhood. You'd prefer we all buy dog food from Mom & Pop who mark-up their prices 100% instead of saving from an on-line retailer.

And I guess that you would prefer that we protect the American farmer even though food can be purchased for less money from other nations. Trying to save American jobs, you claim, but at whose expense. American farmers cannot seem to pick a potato without the help of illegal immigrants. Are you fighting for the rights of illegal immigrants or just the human rights of Chinese factory workers? If you really want to help the American worker, you should be sitting on America's border with Mexico and get yourself ready to shoot all illegals wanting to pick cabbages and keeping Americans from doing a good days work.

If we all listened to you Boboday555, then evrything we purchase would be more expensive. But I'd rather give my savings from buying at WalMart (and all other cost saving ideas) to the charity of my choice and/or save for my kids college education. Better yet, Boboday555, when I am old and need medical care, I will have the money for myself (because I saved in my youth by buying from large corporations). Even better still, my savings and investments will also pay for your healthcare because you were too smart trying to save the world by giving your money to Mom & Pop.

Let me ask you - did ya' ever notice that in small towns (before WalMart) that the people who owned the local shops lived in bigger houses and drove nicer cars than the rest of us. Think about the t.v. series Little House on the Prarie, didn't the Olsens, who owned the local grocery, have more money than just about everyone in town. By owning WalMart stock, I now own a piece of that grocery store.

If their were more folks like you Boboday555, then America would be no better off than the nations that you are attempting to help. America became an economic powerhouse because we were the cheap source of labor in the early 1900's and exported goods abroad at the expense of polluting our people and environment. But now that we in America have ours, shame on developing nations for just that - developing.

[LeftRight]

I'm not going to answer most of this, because I'm sure that it'd take me too long, and I'm pretty busy today, but I must answer this one:

"...But do you think that your local diner (Mom & Pop shop) can sell a hamburger for $1 like McDonalds, Burger King & others? Big business can feed more people because of the economies of scale. You'd prefer people starve so as to save the Mom & Pop Diner. You'd prefer people starve, than eat a $.99 box of mac-n-cheese made by Kraft (try making the pasta yourself, by hand)...."

Okay, the reason that McDonalds, and Burger King, and the other fast food places can make money on a $1 burger is that the quality of the burger is CRAP!!! Go find out someday what's actually in that burger, how low the quality control is, and often, where it's produced. You will find that a mom-n-pop store is going to sell a much, Much, MUCH higher quality burger, and they're going to make a smaller profit margin off it than McD's.

And Kraft Mac-N-Cheese..... Have you read the ingredients? There ain't no cheese in there! Mom-N-Pop places charge more, yes, but they also provide more value to the local economy, AND provide a better quality product, for a cheaper price than they can really afford to!

[weaselbasher]

Don't forget when you make money on your Walmart stock its money made off the sweat of chinese workers including children who work 14 hours a day for slave wages. Some things are more important than money, like basic human rights. You can keep your walmart and your stocks. Remember, Walmart...low wages...always!

[PacificGatePost]

It remains that there's something quite unsettling about "free trade" - at least when the participants are not balanced....

http://pacificgatepost.blogspot.com/2008/02/free-trade-and-american-consumer.html

Rules are needed, then they must be applied. When you have imbalance on geopolitical, financial, social and judicial structures, there is nothing free about free trade.

[ProudLiberalDemocrat]

If any person who 'hates' WalMart can tell me why cheaper goods are bad for Americans, then I will sell my stock. But I submit - WalMart, has single-handedly reduced inflation in America by fighting to pass cost savings on to it's customers.

Oh, it may be true that American jobs have been lost to China, but we exported all of the pollution to China as well. I know, it's awful when people lose their jobs. But should government have stepped in when horse-and-buggy operators (buggy, whip manufacturers, etc.) were losing their jobs to automobile companies? Should the internet have been dismantled because music & movie downloads cost record company jobs. Progress may sometimes have a cost, but the greater benefit to society may far outweigh short-sightedness.

Back to WalMart - shipping factory work to China to keep costs down (and pollution) may be one of the most compelling things that has kept American inflation in check for some time. It's easy to critcize the 'big-bad' company for making a profit, but I ask - which company would you prefer be the most profitable and/or largest? Pick one and I'm sure that someone will decry your choice. Either way, I prefer paying less for the items I buy at WalMart...unless I can find it for less someplace else. This is the American way.

[Boboday555]

Besides, your pollution argument is only valid if China slapped a gigantic 3,691,502 square mile dome over their entire country which would keep the pollution they create making their Wal-Mart crapolla from drifting with the winds to the rest of the planet!!!

If China has designed and built such a pollution trapping dome then I do apologize.

[Boboday555]

Pssst...inflation in America is at a 17 year high!

[LeftRight]

First, inflation has been at high levels for decades, which has been masked by policies such as walmart's. Second, to claim that manufacturing jobs (which create wealth!) need to shipped overseas for progress is idiotic! Third, walmart selling CHEAP goods, which have the same cost as something sold elsewhere of comparable quality, is NOT helping the economy!

[Boboday555]

CUT UP YOUR CREDIT CARD(s).
Trust me, you don't need that stuff you're thinking about charging!

Save your money for the rainy that's just around the corner.

[Boboday555]

HuffPost's Pick

The fact that President Einstein thinks a mere $600 will help Americans who are struggling daily to keep their head's about water shows just how out of touch with real Americans the 'Decider' really is.

And ain't it peculiar that right before these checks are sent out the price of oil hits and all time high?
In light of this very suspicious price increase it is clear that China won"t be the only country that will benefit from the rebate checks...our good pals in Saudi Arabia will benefit too.
You remember Saudi Arabia don't y'all?
That's the country 15 of the 19 9/11 hijackers called home.

This ridiculous attempt to help America"s failing economy, which will actually help our enemy"s economies again shows that President AWOL couldn"t pour water out of a boot if the instructions were on the heel!

[vippy]

Why would anyone sane have a huge credit card balance I never know. Why make monthly payments
and pay interest when you can just wait a little and then buy it, give yourself a discount!
I shall put the money in the bank for I have to pay taxes again. No matter how I adjust my taxes each
year I end up paying more the next year. So here we go again. I shall put it back into savings to make
up a little of what I had to take out. It is a drop in the bucket anyway. It would have been much
more successful to put the economy back on track by reducing the gas prices. Nationalize already!

[LeftRight]

Yeah, cause we are all just buying crap that we don't need, like GAS, to get to work, and tickets to go see my dying grandmother, and insurance so that I can still afford my mortgage. Yes, that's what's currently on my credit card, and I'm paying it back as fast as I can, at several times the minimum, but it will still take many months to pay it all off!

[sharpsteve]

Buy gold and silver with the check and every cent you can scrape together. Get ready things are going to get real ugly. The idiots running this country have just put everyone into $300 more debt that will have to be paid back with interest in more taxes on you grandchildren. Thats who will be paying for this mess. Wake up and figure out a way to get Ron Paul as President before its too late. Ron Paul is the only one who has been trying to stop this madness. The FED Reserve is Criminal. When you are homeless and hungry it will be too late.

[marignymitch]

I'm against this 'rebate' scam because it's more corporate welfare and puts the nation further in debt. It's just more drugs for the junkies. I was hoping to deny the corporatocracy of this windfall. To this end the best and highest use for my check would be to add it to savings. But because I live in hurricane country the money instead will help pay my skyrocketing homeowner's insurance bill. Our corporate masters get a cut at every turn. They can't be avoided.

[nomoredead]

Can I get my rebate in euros ?

[ErnestineBass]

"The WalMart/Beijing Welfare Subsidy of 2008"...ROFLMAO!!!

Aptly put, Norman!

[glitzqueen]

Has anybody else considered that this is essentially a bank bailout, meant to offset some of their self-inflicted losses (current and projected)? I think the pols figure most of this cash will immediately be paid on credit card balances.

Granted, that's a better use for the money than flinging it away at ANY chain store. In all our spending, not just when this check comes, we should support local merchants who sell American products.

[ErnestineBass]

EXACTLY!

Once the banks fattened, butchered, cooked and then feasted upon sub-prime golden goose, it's only natural they'd want a flambe dessert as well.

Bottom line - WHERE IS THIS MONEY COMING FROM? (Borrowed from Social Security, perhaps?)

[glitzqueen]

Yep, they've had quite a feast for years. Wouldn't you love to see them fined in the amount of every fee that involved a subprime transaction (not just Wall Street banks that securitized them and ratings agencies that failed to brand them toxic waste, but also mortgage lenders and appraisers)? It's a nice dream.

[Democrab]

Just donate it to Hillary's campaign against McCain in the general election.

[PaulRaymond]

Actually, if we could get everyone to donate their checks to a Legal fund, so that we can go after these criminals with some civil suits, then they might actually be worth something. Impeachment is clearly never going to happen, so we'll have to wait till they actually leave office. Then, hit them where they live, their bank accounts.

[winoohno]

I thought the article was well-done, but there are some interesting comments from people who apparently need Wal-Mart to survive. I think we can all agree that Wal-Mart has a right in our free market system to operate their business, but our government should not be complicit in allowing our trade deficit to balloon out of control to the point of creating serious flaws in our economy. Our government should try to buy U.S. made equipment and supplies whenever possible, and reward companies who maintain and create jobs HERE instead of giving tax breaks to MNC's.

Going back to the article -- if you have the means, avoid Wal-Mart is what I think the author is saying, but if you need the inexpensive items of daily sustenance, then by all means shop away!

[sawdustinhershoes]

Walmart is not inexpensive, it's cheap. You actually pay the same price as you'd pay somewhere else for products of the same quality. Generally, if I buy something at Walmart, it has a 50/50 chance of not working well, or needing to be replaced sooner that that "same" product that I bought from a different store.

Walmart is not free market. They use their size to come into a town and lowball the local competition for as long as it takes to drive them out of business, then its prices rise to their regular level. Their counterpart SAMS does the same.

I know, I have a retail business. I have to explain to people all the time that a $250 item at my store is a $250 value. That "same" item at Walmart is $199. But it's not the same, even if it's a brand name. It IS a brand name product MADE FOR WALMART. It is not made of the same materials, or quality or quantity of materials as the "same" product I sell. What's really sad for the lower income people is that small retailers are usually honest, far more able to actually satisfy the customer's needs, and for about the same price when comparing oranges to oranges.

Ever try to find a knowledgeable salesperson at Walmart? Ever asked for someone to help you load heavy items for you into you car at Sam's? Good luck.

It's not free market, it is the monopolization of the market. Soon, we have no choice but to buy at Walmart or Walmart-owned stores.

[Wilson33]

Dude, you're nuts. A Sony is a Sony no matter where you buy it. A Panasonic is a Panasonic no matter where you buy it. Tupperware is tupperware, Kitchen-Aid is Kitchen-Aid, etc.

Its called the free market. You either compete in it or you don't. Welcome to capitalism.