So, who’s the party of fiscal responsibility now? (Updated)

The Wall Street Journal reports this morning that Democrats and Republicans are rushing headlong into a poorly-considered economic “stimulus package” designed to appear as though they’ve considered that which is in America’s best interests;

President Bush and Congress, driven by the worsening economic outlook, a tumbling stock market and Americans’ growing sense of financial insecurity, are speeding toward agreement on a package of measures to stimulate the economy.

The president is expected to lay out the principles of his stimulus plan today, but without getting into specifics. Privately, the White House has discussed its support for a tax rebate of as much as $800 for individual taxpayers, more than double the $300 rebate featured in a 2001 effort to spur economic growth.

The administration also signaled it would accept a stimulus bill that didn’t include an extension of Mr. Bush’s tax cuts — a centerpiece of his economic agenda — removing a potential hurdle to bipartisan support for the legislation.

Congressional leaders, including House Speaker Nancy Pelosi, a California Democrat, have discussed wrapping up details of their stimulus plan the week of the State of the Union address, which falls on Jan. 28, though procedural hurdles in the Senate could delay final action for weeks.

Additional items on the Democrats’ wish list: lengthening unemployment benefits and expanding food stamps and the Earned Income Tax Credit, which helps low-income taxpayers.

So which party is the party of fiscal responsibility? Ya know, when they send me my check (if I qualify – but seein’s how I pay taxes, I probably won’t) I’ll keep it, and I’ll put it in my savings with the rest of MY money. Maybe everyone else will spend it and put a coupla billion bucks into the economy in a fairly short amount of time, but maybe they won’t. And that might be a short term fix for the economy.

In fact ,I watched DOW futures up 99 points at 5 o’clock this morning (on a good day they’re usually about 10 points higher) so foreign investors were snatching up US stocks knowing that both parties agree to give us each $800 – and they’re pretty sure, consumers that we are, we’ll spend the money before it hits our wallets.

Until someone suddenly discovers that (shock) the deficit has risen. Then we’ll need a tax hike so that we don’t shift our debt on to the shoulders of some nebulous children in some nebulous future.

If Democrats and Republicans were concerned about the long term health of the economy, making the Bush tax cuts permanent would go along way towards that. The stock market and the economy don’t perform based on today’s events – they perform on expectations for the future. Investors don’t make decisions based on the today’s performance of a stock or bond, but on what they EXPECT that security to perform in the future.

If investors, manufacturers, employers KNOW what their tax bill looks like, they can hire , invest and manufacture based on that information. It’s the uncertainty that election years bring that make the economy and the markets perform poorly. Remember the stock market jumping 5% in the week after the 2004 election – not that the market favored a Republican President so much as it knew what to expect.

But, because it’s an election year, I guess both parties don’t mind going further into debt as long as they use US taxpayer dollars to buy votes. Ya’all remember this next year when the new president, regardless of his party, hits you up for a tax hike.

After reading Don Surber’s excellent piece in the Charleston Daily Mail this morning and reading Michele Malkin’s Revolt Against the Bailout Bandwagon, I had some more thoughts. All of this is related.

The government, both Republicans and Democrats today, is perpetuating the myth that all money belongs to the government. If we spent too much on our house, got a fancy car that was just out of our reach, we’ve come to expect the government to give us some of our money back to correct our poor choices – like we expected our parents to do when we were kids.

When a hurricane comes, we expect the government to give us a $10,000 debit card because we didn’t have common sense to evacuate our homes, or not live below sea level in the first place.

For three years, people used their homes as investments – they called their homes that. Well, guess what – sometimes investments tank. All investments. That’s why they call them investments and not ATMs. Now all of these investors want government to haul their investing butts out of a jam. Like Mom and Dad did.

I’ll bet you half of the country has already planned on how they’re going to spend that tax rebate that Mom and Dad (the Democrats and Republicans) are going to give us.

UPDATE: The latest from the WSJ;

“Americans could use this money as they see fit: to help meet their monthly bills, cover higher costs at the gas pump or pay for other basic necessities,” Mr. Bush said. “Letting Americans keep more of their own money should increase consumer spending and lift our economy at a time when people otherwise might spend less.”

A congressional aide familiar with Thursday’s conference call between Mr. Bush and lawmakers said the White House is mulling giving individuals and households tax rebates of $800 and $1,600, respectively, and letting businesses deduct half of their new equipment purchases.

Mr. Bush’s last stimulus plan in 2001 included rebate checks of either $300 or $600. It took around 10 weeks to issue those checks, and the Congressional Budget Office said a similar delivery time can be expected if rebates are included this time around.

While I agree with letting Americans keep more of their money, I disagree that it should be temporary. If letting Americans keep their own money is good for the economy today, why isn’t it good for the economy next year?

What’s really good that will come out of this; the Democrats have admitted by pushing these rebates, that the 2001 rebates were the right thing to do, too – despite the fact that they opposed them at the time. So Republicans do know what they’re doing when it comes to the economy.

Category: Economy, Politics