A Stitch in Haste

It is a rare day indeed when I chastise myself by asking, "How could I have been so naive?"

Yesterday was such a day:

President Bush and House leaders struck a deal on Thursday for a $150 billion fiscal stimulus package, including rebates for most tax filers of up to $600 for individuals, $1,200 for couples and, for families, an additional $300 a child.

The unsupportable notion that children should be subsidized as a matter of policy by redistributing income from the childless to the childed is a topic for a future blogpost. Beyond that, the notion of income tax rebates was as expected.

Or so I thought:

Under the deal, tax filers who earned at least $3,000 last year, but paid less than $300 in income tax, would receive the $300.

It is not my purpose to be mean, but let's be absolutely clear on this: If you receive more from the government than you remit to it, that is not a "tax rebate." It's a welfare check, and you are a welfare recipient.

Meanwhile, the welfare-check nature of this plan will make the federal income tax, which is already obscenely progressive, even more progressive than it would have been under a true rebate program (i.e., income tax = progressive, rebate = more progressive, welfare program = super-duper progressive).

How could it possibly get any worse?

Full rebates of up to $600 or $1,200 would be paid to individuals earning up to $75,000 adjusted gross income or couples filing jointly and earning up to $150,000. Above that, rebates would be reduced by 5 percent for each $1,000 in income.

So not only is this package not a rebate at the low end, it's also not a rebate on the high end. The very people who most deserve relief -- the ones who actually pay the overwhelming bulk of federal income taxes -- don't get a rebate but instead receive, as Lewis Black would say, a poke in the eye. To our fiscally liberal Congressional leaders (and our even more fiscally liberal president) this is, somehow, "fair."

This is also, somehow, "gridlock." Usually, when the Congress and the White House are controlled by different parties, fiscal insanity is at least partially curbed. This explains the fraud of the "Clinton surpluses" after the 1994 elections: they were in reality "gridlock surpluses" (with help from the dot.com boom and the peace dividend).

Why isn't gridlock working this time? What could possibly explain such counterintuitive politicking?

Two words: election year.

Nothing obliterates gridlock and replaces it with "bipartisanship" more quickly and more completely than incumbent entrenchment (cf. "campaign finance reform"). And what could possibly endear unsophisticated voters more to their representative in Congress (or to the party of their president) than a check?

This $150 billion disgrace (which still faces review -- bloating? -- in the Senate) has nothing to do with "economic stimulus" -- everyone even remotely familiar with Keynesian economics knows fiscal policy takes months, quarters or even years to work, if it works at all (hilarious footnote here). It's brazen, naked, disgusting, immoral vote buying, pure and simple.

And they will get away with it. They always do.

---

Meanwhile, who of course is the one person on the planet who is enough of a liar-idiot hybrid to insist that the package -- his words -- "consists of nothing but tax cuts and gives most of those tax cuts to people in fairly good financial shape"?

---

More thoughts at Cato@Liberty, Rolling Doughnut, Tax Policy Blog.