January 25, 2008 -- The Bush administration and House leaders yesterday announced a tentative deal on a proposed $150 billion economic stimulus plan.
Their solution?
Free money!
That's the crux of the proposal, which would send rebate checks of at least $300 to all Americans earning up to $75,000 a year, plus some added relief for mortgaged-strapped homeowners and businesses making capital investments.
Some of this is surely good news.
The Senate is not yet on board, so it's necessary to wait to see what finally emerges from the congressional sausage factory.
But at least for now, the package seems happily free of some of the more reckless spending items Democrats were hoping to include.
Unfortunately, the entire plan ultimately reflects one of the most enduring - and politically convenient - economic myths around: the notion that hard times can be softened by throwing money at them.
What's worse is that we have seen this many times before and it never works. In 2001 Bush pushed similar handouts, er...I mean rebates...and the economy stayed slow. It wasn't until the pro-growth tax cuts of 2003 that the economy started humming. But alas, pro-growth tax cuts don't poll so well in an age of instant gratification and economic ignorance.
The prospects for this monstrosity in Congress are sadly very good. John Boehner, whose leadership we have lauded much recently, made a bad decision to sign off on this thing already. I expect Republican leadership in the Senate to capitulate as well, although there are some rumblings that the Senate GOP's number two man, Jon Kyl, may make a fuss about this, which would be wonderful to see.
And the Democrats of course love this. All Nancy and Harry needed to know was one thing: Does this give free tax payer money to people who don't pay taxes? "Yes? Great sign us up, we love redistributing wealth! And we love it even more when we sucker Republicans in to joining us in our inexorable march toward French-style government."
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