Rebate and Switch

The poor get richer

As regular readers know, I try to do an annual plea for tax sanity around this time of year. After all, it’s your money that our government is taking to pay for such vital public services as flowers for Nancy Pelosi, a bridge to nowhere in Alaska, and Ted Kennedy’s bar tabs. And if you are thinking “What’s wrong with any of those?” you should stop reading right now.

This year’s plea revolves around the recent plan by George W. Bush to stimulate the economy. With the subprime mortgage situation, dropping housing prices, the weakening dollar, and oil prices going through the roof, there has been talk of America going through a recession. (Of course, most people talking about America going through a recession aren’t informed enough to tell the difference between a recession and a tuna fish sandwich, but that’s another column for another time, provided StarKist doesn’t beat me to it.)

To combat this, Bush announced that the government would give back another $600 to $1200 to taxpayers if they met certain criteria. This sounds like a good idea, right? After all, we’ve seen time and time again that allowing people to keep more of their money helps the economy. And one of the things Bush has stuck behind regardless of how much he’s maligned for it has been giving people their money back. So, Bush’s plan is bound to work, right?

Not so much. As it turns out, it’s possible for people who didn’t pay any taxes whatsoever to get a rebate. In a way, I understand the rationale, given how Bush has been blasted for “tax cuts for the rich” and some of the people most negatively impacted by the aforementioned economic situations are the poor. Having said that, the poor aren’t exactly known for their financial acumen. Remember how some Hurricane Katrina victims spent the money the government gave them? Let’s just say there are some strippers who had a very good evening with tips paid for by you and me. And we didn’t even get a lap dance out of it.

The Bush plan is unique from an economic standpoint because it combines the ideas of supply side economics that the right loves and the redistribution of wealth that the left loves. We’ll see whether it works with any degree of success, but I get the feeling it’s going to work like the David Gest-Liza Minnelli marriage. Good things usually don’t happen when you give the financially irresponsible money to spend. If you doubt that, check out my credit card bills.

And the funny thing? Regardless of what happens, Bush will still get saddled with negative press because somebody’s bound to complain. And you don’t have to go back that far to see proof of that. During his first term, Bush listened to Congressional Democrats who insisted there be a tax rebate along with the tax cuts he proposed. After he complied, guess who lined up to take pot shots at Bush in the press. The very Congressional Democrats who insisted upon the tax rebates in the first place!

I get the feeling we’ll see the same thing with the latest Bush tax rebate plan. Don’t be surprised if you see Democrats saying that the rebates “just weren’t enough” to help the poor and that if Bush really cared about the poor, he would have insisted on giving them more. We’re already seeing the left criticizing Bush for the subprime mortgage bailout plan as not being enough, so it’s not outside of the realm of possibility that they’d complain about the new tax rebate. Democrats are the only people I know who could get everything they wanted and still find a reason to complain. Well, except for mother-in-laws.

But the thing that is getting lost in all of this is that giving someone money doesn’t make them any more capable of earning it. Giving someone $600 this year may help them make a mortgage payment or pay off a few bills, but it doesn’t make them any more willing to cut back expenses or find a second job to pay those bills. And it doesn’t guarantee there will be another $600 waiting for them next year. After all, Hillary Clinton and Barack Obama are still in the running to be President.

President Bush may have his heart in the right place, but I’m not sure where his head is at with this idea. It won’t quiet his critics, give the poor an incentive to be economically responsible, or impact the rest of the factors that are starting to impact our pocketbooks. In short, it’s a bad idea.

Unless, of course, I’m one of the folks to get a rebate. Then it’s the best idea ever!

And that’s the Bottom Line.

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