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Tax Rebates: To Spend Or Not To Spend

Reaction To Stimulus Plan 01:45

Olga Barahona is right in the middle of the tax bracket President Bush is apparently targeting to deliver the jolt to the economy. She says $1600 would help.

"I would definitely pay off bills," she told CBS News correspondent Sandra Hughes. "I own a house and I definitely have things that come up."

President Bush is reportedly thinking about a plan that would give tax rebates to singles earning up to $85,000 a year and couples earning up to $110,000.

Olga and her husband, both teachers, together earn $95,000 a year.

"If we have the extra money, you definitely want to buy things," she says.

That's what the government is counting on. But economists are not recommending quick buying sprees.

"One, If you have high-interest-rate credit card debt or installment debt, pay that off," advises economist Ben Stein. "Two, if you can save it, save it. Three, if you absolutely have to spend it, buy something durable with it, like a freezer, a refrigerator, or a microwave oven."

Michael Franke, another teacher, says he'll sock his money away. But he thinks more needs to be done for the really needy.

"I think it's nice to have something like food stamps in there, which is designed to relieve misery -- and economic stimulus for the middle class," he says.

These teachers like the plan - and hope Wall Street likes it too. They say that they want their retirement accounts to stop hemorrhaging money.

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