February 19, 2009

Pennies from Heaven

By Bob Weir

We've all been inundated with opinions, from both sides of the political aisle, about the $780 billion Stimulus Bill. President Obama signed the huge package into law this week, promising that it will turn the ailing economy around. Republicans in the House voted against the bill, but didn't have enough clout to keep it from being passed and sent to the Senate. Three Senate Republicans voted for it, providing just enough votes to keep it from being filibustered.

Okay, now that the political process has ushered the bill into law, it remains to be seen if it will in fact revitalize the economy and ease frozen credit markets. In order to get this legislation passed, Obama and his colleagues in the House and Senate, constantly predicted that Armageddon was our fate unless the government opened up the Treasury and sprinkled cash across the land, which will kick start the economy.

But, is that really what will happen? For months, the president has been scaring the public with dire predictions about our future. If you were afraid that your family might go hungry if you ran out of cash, would you be willing to spend the $800 as soon as you received it? I think most people would squirrel it away until their situation became desperate. After all, it's a one-time infusion of capital, so why would any responsible person spend what might be their only chance to survive if the economy tanks?

The right way to get money flowing is to assure people that they will have extra cash week after week for a substantial period of time. That could be done by granting a moratorium on federal income taxes for about a year. Imagine how much extra money would be in paychecks each week if there was a blank space in the federal tax deduction column on your check stub. Such an action by the government would be tantamount to giving a fat raise to each worker. When people receive a raise which they know is permanent, they generally feel confident enough to begin spending more.

To the bureaucrats in Washington such a suggestion amounts to heresy. Allow people to keep more of the own money? What an absurd notion! They'd rather have us believe that they are doing us a favor by sending a check. The fact that it's merely a fraction of the money they take from us each year to keep this bloated ship of state afloat is not something they include in the discussion. Moreover, if they truly believe that the $800 will revitalize the economy, they must admit that they took too much in the first place, thereby causing the problem we're facing.

The primary reason they would never suspend the federal tax is because they're afraid that once people got used to having so much more of their own money, it could lead to a violent revolution if the government tried to take it back. Keep in mind, when the first income taxes were levied it amounted to a tiny percentage of earnings. Over the years it crept up on us like a Preying Mantis moving stealthily along a tree limb toward its next meal. Now it amounts to about half of everything we earn.

Nevertheless, we can only hope that this latest "bailout" package will do more than the last one did. In October, the first $350 billion of TARP money, sprinkled like fairy dust across the land, seems to have vanished like aces up a magician's sleeve. We lost close to 2 million jobs during the 3 months since the checks were received. In addition, during that period the Stock Market has dropped another 14 percent and bank loans have decreased. Meanwhile, back at the top of the food chain, Wall Street bankers helped themselves to $18.4 billion in bonus money. As an additional insult to our intelligence, the $780 billion contains a plethora of earmarks that the Democrats told us would not be part of the bill. One example is Speaker Pelosi's $30 million slice of cheese to protect the "endangered" salt marsh harvest mouse. How many families could be fed, clothed and housed with $30 million? Are these people living on the same planet as the rest of us?

Bob Weir is a former detective sergeant in the New York City Police Department. He is the executive editor of The News Connection in Highland Village, Texas. Email Bob.