A Stitch in Haste

What was I saying a few days ago about a "flaccid mish-mosh of tired Keynesianism"?

Oh right: It's a proposal by liberals —

President Bush called on Friday for a $140 billion to $145 billion mix of tax rebates for American families and incentives for businesses to provide "a shot in the arm to keep a fundamentally strong economy healthy" and avert a slide into recession.
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There was speculation beforehand that the relief package would amount to $800 rebates for individual taxpayers and $1,600 for households. Based on the $140 billion to $145 billion range of the entire package, it appeared that the rebates would not exceed $800 and $1,600.
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Democrats are drafting a package that would cost about $100 billion[.]

Some hasty stitches:

--The Democrats want $100 billion; Bush wants $140 billion. Who's the liberal here? (See also this post.)

--If you're going to be a Keynesian, then at least be an intellectually honest one: Keynesianism requires government surpluses during economic expansions, such as the one we were relentlessly reminded that we were in for 52 consecutive months. Going from ginormous deficits during expansions to super-duper-ginormous deficits in not-quite-recessions is not "Keynesianism" and is not "prudent fiscal policy."* It's pander politics, pure and simple.

--A great economic stimulus would be to end the Iraq War. Just saying.

--As for rebates: As I have noted annually in response to the tax policies of another radical liberal, Michael Bloomberg (who plays the same seize-then-rebate con with New York City property taxes), a tax rebate is a viciously progressive tax stunt. If a taxpayer who remits $801 dollars in taxes gets $800 back, and another taxpayer remits $8,001 and gets $800 back, and a third taxpayer remits $80,001 and gets $800 back, that's progressive taxation. And given how stratospherically progressive the federal income tax already is, the idea that a stimulus should make it even more progressive is simply obscene.

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*Speaking of "intellectual honesty about government surpluses," let's keep in mind that the surpluses of the Clinton Administration were not due to any fiscal restraint or policy wisdom by the Pervert President. They were the result of the stock market bubble, the peace dividend and — most importantly — gridlock. Which is why Inauguration Day 2009 should mean only muted celebrations in libertarian circles.

Lewis Black on tax rebates (contains naughty language):



There's much is his rant that is not particularly libertarian, but the end is, where he reminds us that "government is human beings."

The conundrum I (and Lewis Black) hinted at previously about the latest plan to pander to the middle class stimulate the economy via minuscule (i.e., purely symbolic) "tax rebates" is becoming surprisingly (and refreshingly) prominent:

As President Bush and Congressional Democrats begin negotiations on a package of measures to stimulate the economy, the big fight will be over whether to put extra money in the hands of tens of millions of low-income families who paid little or no income tax last year.

Nearly 40 percent of Americans owed no federal income tax last year, though even low-income workers paid taxes for Social Security and Medicare. While Mr. Bush has refused to disclose specifics of his $145 billion plan, administration officials and Republican lawmakers favor a proposal that would offer rebates of up to $800 for individuals and $1,600 for families — but only if they paid that much in taxes last year.
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"You have to be a taxpayer in order to get a tax rebate," said Representative Paul D. Ryan, Republican of Wisconsin[.]

Indeed. If the government remits money to people who pay taxes, that's a rebate. If the government remits money to people who don't pay taxes, that's welfare. Think any Democrat proposing the latter will have the intellectual honesty to admit as much?

Exhibit A:

On the presidential campaign trail, Senator Hillary Rodham Clinton of New York and John Edwards, a former senator from North Carolina, attacked the Republican approach for excluding people who need help the most.

Clinton and (especially) Edwards, who are moral defectives but not stupid, know full well that the federal income tax is obscenely progressive and that tax rebates cannot reach the working poor whom they pretend to champion. But did, or will, either acknowledge that what they are proposing is middle-class welfare? Of course not.

Exhibit B:

Senator Barack Obama of Illinois has already proposed a $90 billion program of rebates and supplemental Social Security payments that his aides said would reach 95 percent of workers.

Obama has been particularly insolent in not only vowing not to reform Social Security, but also in being the first and most vocal in calling for scrap-the-cap, which would remove any last pretense that Social Security is "old-age insurance" or "compulsory retirement saving" and is in fact merely another naked welfare scheme. (Recall also that it would be the largest tax increase in American history.) Remind me again how Obama is a libertarian?

Incidentally, does anyone really need reminding that January 2009 would be a tad bit late to implement any Democratic economic stimulus plan? Just saying.

To review: While no stimulus program is wise (or, for that matter, a legitimate function of government), and while increasing an already bloated government deficit is not exactly textbook Keynesianism, and while the only moral position would of course be permanently lowering spending and permanently lowering taxes, we are, in the reality-based community, confronted with three options:

1. The neither preposterous nor cruel premise that those who actually pay taxes should be the ones who actually get rebates.



2. Middle-class welfare during an election year.



3. Additional raiding of the (fraudulent) Social Security "trust fund."

I will not apologize for insisting that Option 1 is the least worst alternative.

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.

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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"?

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

How's that tax-rebate, needs-to-be-quick, bipartisan fiscal "stimulus" package doing?

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I blogged previously:

This $150 billion disgrace ... still faces review — bloating? — in the Senate ...

We can now lose the question mark:

Shrugging off a personal plea from President Bush, senators from both parties said yesterday that they will push for significant additions to the $150 billion stimulus package hammered out Thursday by House leaders and the administration.

Senators from both parties? Who could have seen that coming?

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?

Acta es fabula, plaudite!

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Having made sure that people who actually pay high income taxes do not get a check (which would be too fair — go figure), and having made sure that the working poor who pay no income taxes do get a check (which would mean this is not a rebate but welfare — go figure), who could the politicians, drenched in their "bipartisanship," possibly have forgotten?

Retirees living off Social Security are frustrated that they won't get tax rebate checks through a bipartisan economic stimulus package before the House. Senate Democrats Friday began efforts to include them.
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[The House plan] would leave out about 20 million senior citizens living chiefly on Social Security. ... "Less than half of all Americans 65 and older would get it," said AARP spokesman Jim Dau.

Ah yes, the entitlement elderly. Can't let them go without sucking some more taxpayer blood, right? Senators are tripping over themselves to introduce checks for them, among other vote-buying measures, possibly to the point of a conference committee showdown with the House. Stay tuned...

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As I mentioned previously, the "needed fast" rebate checks can't be mailed before May at the earliest. Of course, "needed fast" really only means "needed before the November elections," so the politicians are all set.

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Guess who (besides poke-in-the-eye taxpayers like me) doesn't like the stimulus package? Economists. Go figure.

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Guess who also doesn't like the stimulus package? The New York Times. But of course not for the same reasons that the economists don't like it. Go figure.