Friday, January 18, 2008

When a Tax Cut Isn't a Tax Cut

Answer: when it's a one-time rebate.

President Bush wants a quick $150 billion in "tax relief" to Americans to get the economy jump started. We could adopt a strict economic mantra which would probably yield the right decisions when faced with challenging economic questions. Perhaps: WWFBD (What Would Fredric Bastiat Do)?

Yet, I think like in most things governmental (and let's all pause for a moment and thank the Left for putting the mental in governmental to begin with, shall we?), we'd be causing the patient such a shock that it might be too much too fast, because Bastiat would probably disband the IRS and privatize the Defense Department.

For starters, though, if the President and Congress are serious about doing something, let's make it a genuine, bona fide tax cut, and not a one-time affair. Bush has done this before, of course, and as a rebate, early in his first term. The hope - and isn't it simply audacious of us to hope? - is that people would go out and spend those rebates of a few hundred dollars.

Forgive me if I'm not doing cartwheels for it was my money to begin with. And yours.

My colleague Matt made an excellent point today: we've for too long been an economy that rides the strength of consumer spending. We'd be wise to adopt policies that focus on strengthening the business base of the economy (think durable goods and manufacturing) to complement and diversify what makes our economic engine hum.

And while I'm dispensing advice, let's get the federal government out of the domestic/entitlement business. The states would be far superior in delivering services of that type to their citizens based on familiarity (a local understanding of what their people need) and proximity (being able to deliver services closer to the users).


Rick Darby said...

Good post, Michael.

Here are my thoughts, which I believe are along the same lines.

Michael Tams said...


Thanks for the good word. I liked your observations, especially as it applies to those jobs that we're always told Americans won't do.


Call Me Mom said...

I read your thoughts and I liked your observations too.

Here's another thought: Whatever happened to building things that will last? I can recall my grandparents discussing purchases and they always decided it was worth it to pay a little extra(sometimes a lot extra) for something of better quality. Where do we find better quality items nowadays?

How many times have I been asked if I want to purchase a warranty for an item I am buying? Usually these store warranties(buyer protection plans -whatever they call them in your neck of the woods), run for about 2-3 years after the purchase date. My reply is always: "why should I buy a separate warranty? Are you saying this item won't last that long? " the sales clerks usually shrug and ask me what I will do if it doesn't. At that point I tell them that it should be covered by the implied warranty for 2-3 years, so no, I don't care to purchase a warranty. I don't think most of them know what an implied warranty is.

It's a sad day when we accept the idea that something shouldn't last even a few years after purchase.

Call Me Mom said...

Oh, I thought I'd try the avatar deal, what do you think?

Michael Tams said...


Yeah, I'm with you on the warranty thing. Wait - is what you're selling me going to work? Then what do I need that for? If I break it, fine. But if it just stops working?

I like the avatar, nice job.


Rick Darby said...

Call Me Mom,

Yes, your avatar is cute!

I wish I knew a setting so my picture wouldn't appear on every comment but would stay in the bio. There seems to be no way to instruct Blogger to do that, though.

Call Me Mom said...

Thanks for the feedback on the avatar.

The idea of building things to last isn't just a comment on warranties though. I am wondering what kind of affect it would have on our economy if we were no longer willing to accept poor quality goods.

Would that create a demand for skilled workers? Would it shift our point of view back to thinking in the longer term personally as well as politically? What kind of an impact would that have on our trading partners?

Just thinking out loud.

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