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| His Voice |
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| Written by Earl Hiatt / Community Columnist | |
| Friday, 14 March 2008 | |
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‘Rebate’ relies on faulty reasoning  Earl Hiatt / His Voice It takes two to lie: one to tell it, the other to listen. Isn’t stimulus a great word? It sounds so scientific. The federal economic stimulus package is being called a “tax rebate,” but in fact it is nothing but a welfare check. When it comes to government programs, what matters are good intentions, not the actual results. A reporter on Fox News recently asked, “Which presidential candidate is most qualified to turn the economy around and avoid a recession?” The quick answer is: none. There is every indication that no matter who wins the November election, we face a future of massive spending, inflation and regulation. Suggesting that politicians should refrain from tinkering with the economy seems akin to standing in front of a runaway train and yelling, “Stop.” Politicians left and right have jumped on the “stimulus” bandwagon. Politicians on both sides of the aisle are delighted to buy votes with this $168 billion stimulus package. The idea behind these plans is to get money in the hands of consumers, who will spend it quickly, thereby revving up demand and “stimulating” the economy back to good health. That is like withdrawing money from a downtown ATM and depositing it in an uptown ATM. Mankind has yet to invent a machine to create money out of nothing: It’s taxes, inflation or debt that has to be paid later, and that crowds out capital creation now. There is no other way. It is indisputable that, given the state of things, bad economic times will be a forerunner to bad and worse economic policy. The Democrats will give us more spending, regulation, war and inflation. And the Republicans (except Ron Paul) will give us, well, more of the same. The administration claims that a stimulus package is expected to help create more than half a million jobs by the end of 2008. If that were true, why wouldn’t the government just mail $100 billion in rebates to Americans every year? Your government is pushing discredited 1970s Keynesian policies. Your leaders are, in a sense, saying that they have solved all the problems of the business cycle, which is ludicrous. Just borrow money and mail checks whenever the economy slows — we’ll never have a recession again! Trying to micromanage short-term growth is sheer folly. Nothing is more fun than doing noble deeds with somebody else’s money. The whole rebate idea is really just smoke and mirrors. There is just one problem — there is no such thing as a free lunch. The standard stimulus package doesn’t change incentives. The money has to come from somewhere. If you raise taxes to fund the plan, the people who are taxed are poorer and will spend less. If you borrow money to fund the plan, the people who buy the government bonds have less money to spend, and that offsets the stimulus. It is like taking a bucket of water from the deep end of a pool and dumping it into the shallow end. Funny thing — the water in the shallow end doesn’t get any deeper. That’s why stimulus games based on giving people money have a poor track record. Usually, the only thing that gets stimulated is a politician’s approval rating. Patterson resident Earl Hiatt is a semi-retired agri-businessman whose major interests are nutrition, economics and religion. His columns appear occasionally on the Irrigator Voice page. He can be reached by e-mail at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
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