Human Events | Mark Skousen | Jan. 22, 2008
Anytime the government gives money back to the people, it’s a good thing, so I have no qualms about President Bush’s tax rebate of $800 per taxpayer, or $1,600 per couple. He ought to recommend it every year, not just when a recession threatens.
Bush did the same thing in 2001 only on a smaller scale: $300 per person, or $600 per couple. It did a lot of good to encourage a recovery in the economy, precisely because most people paid off consumer debt or saved/invested in the tax rebate. Those pundits on CNBC (and even President Bush) who said that if consumers don’t spend the money, the rebates would do no good, were proven wrong. The US economy started recovering right after the rebates went into effect. As I wrote recently in the Wall Street Journal, and the Christian Science Monitor, the economy is driven by supply-side saving and investment, not consumer spending. Consumer spending is the effect, not the cause, of prosperity.
Of course, I (and Wall Street) would prefer that President Bush take advantage of this dire economic situation to push for permanent extention of the 2001 Bush tax package instead of a stopgap measure. But this isn’t the first time this administration has disappointed free-market conservatives.
On the spending side, expanding the food stamp program and unemployment insurance can only make the recession or slowdown last longer! Studies show that unemployment insurance prolongs the unemployment lines. The unemployed don’t start seriously looking for new work until the benefits end.
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