Greasing the Skids
If Democratic economics are "tax and spend" then it would seem justifiable to classify President Bush's Republican economics as borrow and spend. Several years ago with a seemingly vibrant economy and glowing predictions about huge future budget surpluses, an agenda of tax reductions along with increased government spending seemed tolerable. But now, after two years of sustained recession and a costly military occupation in progress, it should be quite evident that predictions about budget surpluses are no more then optimistic guesses based on passed market trends and therefore not likely to materialize. Nevertheless the optimists in political circles continue to advocate that government economics should be managed as if the money were already in the bank. I don't know for sure, but that sounds a whole lot like playing dice with the kids college fund or ma and paw's pension money.
In any event, the tax rebate recently doled out to the American taxpayer was particularly interesting in its strategic underpinnings. With most taxpayers getting $300-$600 back, the total expenditure amounted to something like 60 billion dollars. The notable thing was that the administration floated a loan to cover the rebate rather then use existing government holdings. In response to a inquiry from the news services, the administration's response was that the loan was a "routine" transaction and therefore not in any way unusual. I'm not an MBA, but I thought that as a matter of routine loans are always paid back with interest. Otherwise, the lender (whoever that was) wouldn't have any incentive to agree to the loan. So technically, the rebate amounted to forcing each taxpayer float a small loan that would be absorbed through their future tax payments. An intuitively reasonable attempt at "stimulating the economy", or so the rhetoric went. After all, the extraordinary growth of the stock market during the past decade was partially due to the huge credit card debt we Americans have collectively accumulated. Although, the rebate didn't turn out to have the advertised economic effect, it still amounted to a seemingly benign move on the part of the administration. That is, if the promised tax cuts are delivered and sustained without eventually putting the government back in deep debt and thus making future tax hikes inevitable. Oh well if that's how things eventually turn out. The Democrats can take the hit for a tax increase when next again they occupy the Whitehouse. Evidently, part of the dynamics of a "two-party" system.
Equally as notable is the observation that an extra $300 or $600 dollars in the pocket really doesn't mean much in the long-run economic lives of most citizens, even for those at the lowest rungs of the taxable income ladder. In this regard, the administration's motives for the rebate were likely more political then economic. Perhaps a bit crass in saying, but the rebate was tantamount to having a little chump-change thrown at us in an attempt to buy grass roots support for a the new administration and its domestic agenda. It was like saying, "you see, if we can justify throwing some pork your way, then we can also be generous toward 'our partners' the religious establishments in spite of the constitutional improprieties involved". Well, after the events of September 11th, the administration's popularity became a non-issue, even in the face of a sagging economy and a bag full of ill conceived and dangerous domestic initiatives. The perverse truth is that without the likes of ben Laden and the events of September eleventh, Bush would likely be in the deepest popularity trouble imaginable. Time will only tell if this nation can muster the necessary wisdom of insight to distinguish between the default commander and chief of a war on terrorism versus the "born again" party boy for the religious right (CNN News Article). Simply because September eleventh happened on his watch, does not mean that Bush is the kind of leader that this nation needs to carry it through the storm.