Editorial: Economic bailout helps no one
Vail CO, Colorado
The bipartisan proposal to refund almost $150 billion in taxes to Americans may win George Bush and the Democratic Congress some political points with the American public, but it will do little to help our economy.
It’s high time we as a country learned to live within our means. Our willingness to buy more home than we can afford and rack up more credit card debt than we can hope to pay off helped fuel the economic downturn that many experts say could lead us into a recession.
But instead of encouraging Americans to pay off debts or save the tax refunds ” which, as currently proposed, would award individuals up to $600 or married couples up to $1,200 ” the proposal only works if we use the money to go on a spending spree.
The plan is flawed on several levels.
First, the U.S. economy could only benefit from this tax refund if Americans use it to buy American-made goods. But this country imports far more goods than it exports, and that makes it difficult to guarantee that Americans will only buy clothes, furniture, toys and electronics made in the U.S.A.
Secondly, the plan worked out between Bush and the House of Representatives would lift the cap on loans insurable by the Federal Housing Administration from $367,000 to $729,750. Americans already are having a hard time paying their mortgages, and this plan appears to be an enabler at a time when we could use a little discipline.
Thirdly, a $150 billion stimulus package may seem huge ” especially since taxpayers will have to borrow money to pay for it ” but compared to the overall size of the U.S. economy “$14 trillion or so ” it’s actually very small. Even as a way to encourage consumer spending, the package is unlikely to have much of an effect.
Lastly, the U.S. deficit is expected to reach $250 billion ” and that number doesn’t include the economic stimulus package. America will have to pay this debt back someday, and rather than subjecting future generations to the burden we should figure out how we can start paying it back now.
Yes, a recession ” especially without the dubious help of an economic stimulus package ” seems likely. But to quote Treasury Secretary Andrew Mellon, who served during the Great Depression, “High costs of living and high living will come down. People will work harder, live a more moral life.”
Mellon’s morality may sound quaint today, but in the context of ‘fiscal morals,’ it’s hard not to argue that Americans today are a frivolous bunch, more apt to charge than save. That’s a recipe for trouble no bailout will cure.
” Tamara Miller for the Editorial Board
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