Today President Bush called on Congress to put together an economic stimulus package as the country slips toward the “r” word, just in time for the 2008 elections.
And with this call comes some good common-sense ideas, one being to extend the Bush tax cuts beyond their 2011 expiration. (The Administration talks about making the tax cuts “permanent” but we all know that nothing in Washington is permanent except government’s lust for power.) However, that argument has gotten nowhere with the majority party in Congress because they still subscribe to the notion that those tax cuts only benefitted the wealthy, conveniently forgetting that those who actually pay taxes would naturally benefit from tax cuts. Instead, the Democrats wish to consider still more ways to transfer wealth from those who are producers to those people who aspire to nothing more than getting as many government handouts as possible.
The nub of my problem is the Pavlovian response by those in government to do something – anything – to solve the problem. Once again it takes away from any incentive to be self-reliant and learn from mistakes. As in most economic matters, the problem will only be worsened and prolonged by having the government stick its nose into the mess it helped to create in the first place by growing so large that it sucks money out of the economy that could be used for other purposes.
One plan that is being discussed is a return of the tax rebate checks most Americans received a few years back – possibly $800 for individuals and $1,600 for married couples. I suspect that like 2001, these checks would be “advanced tax credit” checks – so it’ll be sort of like where you take out a loan in anticipation of a tax refund. You get more up front but less at the end, plus I’m sure states like Maryland will consider that extra income to be taxed.
All right, so I get an $800 check. The feds want me to buy something in the hopes of goosing the economy. But a lot of people who are behind on their mortgage bills and credit cards will simply send that cash along to whomever they owe, which will help bail the banks and creditors out. It’s a similar argument to the one over the subprime mortgage bailout, which helps the creditors but doesn’t teach those who weren’t of enough sense to borrow within their means that they should consider their options more carefully.
And why is it that the federal government now reflexively hands out taxpayer money when the chips are down? They seem to have become the insurer of last resort for America.
If you really want to put money in the pockets of Americans right now, I have another suggestion for a short-term fix. How about suspending backup withholding for a few months? Since most Americans have their tax lives set up to get a hefty refund and “screw” the government (who’s actually screwing these people by receiving an interest-free loan from them) all that would do is make their eventual refund a little smaller. Furthermore, maybe if people actually had to write a check for the full amount due they’d understand just how much of a bite we all have taken from us.
Instead, as Michelle Malkin concludes, “(t)he stimulus will stimulate more of the same bad behavior that got people into trouble in the first place.” Some people never learn.
Crossposted on Red Maryland.