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 ie-hard
supply-siders like me have been skeptical of the economic effects
of Uncle Sam sending out tax-rebate checks later this year. For
the umpteenth time: The problem with the economy is too little investment,
not too little consumption, so it's not clear how $300 to $600 checks
are going to help reverse the financial slide.
But make no mistake about it: These tax rebates are a political
masterstroke. The experience in the states with tax rebates is they're
extremely popular with voters — especially taxpaying voters
not used to getting a refund check in the mail from the IRS. But
is the GOP shrewd enough to capitalize politically on these 98 million
checks that will start to be mailed out starting in mid-July?
Republicans should pay attention to the political lessons from state
rebate checks sent out in recent years in Minnesota. Readers will
recall that the governor there is one Jesse "The Body" Ventura.
On a recent trip to Minneapolis, I asked a team of political pundits
what residents thought of Ventura. The response was shocking: Despite
Jesse's sometimes less than tasteful verbal indiscretions now and
then, he's still quite popular. Why? I asked. The answer: Minnesotans
remember tax rebate checks they've received in the mail in recent
years from the state government. They remember Jesse's mantra: The
budget surplus belongs to you! And lo and behold he gave it back!
Minnesotans refer to these payments as "Jesse Checks." What an ingenious
reminder to voters of the man who's chiefly responsible for these
unexpected but greatly appreciated tax refunds.
Bush needs to take a page out of Jesse's playbook. Start referring
to these refund payments as "G.W. Checks." The RNC should start
an aggressive advertising campaign entitled: Did you get your G.W.
check today? Already Democrats are grousing that Bush has a letter
going out to taxpayers reminding them of the rebate checks and of
his promise for tax relief. Good for him. Better yet, Bush's photo
should appear right on the checks.
Now, rebates are about the worst way to cut taxes from an economic
standpoint. They give back money to investors and workers based
on the amount of taxes ALREADY PAID. You can't change yesterday's
behavior, no matter how much you jiggle with tax incentives. (But
history sure proves you sure can change tomorrow's behavior with
tax changes, which is why marginal tax-rate cuts are so essential
to economic revival.)
That said, rebates do have one other virtue--and it's a virtue that
ought not to be sneered at. There are at least $100 billion of funds
that will now be returned directly to taxpayers. That's money that
won't be left lying under the sofa in Washington for Congress to
spend. Anything that gets money out of Washington, I'm reflexively
in favor of. These rebate checks are popular and an effective antidote
to big government.
In the future, any tax revenues that exceed total expenditures and
that are not part of Social Security and Medicare, should be returned
automatically and immediately to taxpayers. In other words, why
not send a refund check every year to taxpayers with the size of
the check inversely related to the amount Congress spent during
the year. This could create a powerful constituency for leaner government.
Americans may like these gushy feel good federal programs (such
as $300 million in a recent appropriations bill to "encourage marriage"),
but not if it means a smaller rebate check.
Liberal and pompous political commentators have been ridiculing
rebate checks as financially insignificant. Gail Collins of the
New York Times snuffs that "although I won't quit my job,
I do hope to buy my parents a new house and perhaps travel." What
biting sarcasm.
But these eggheads just don't get it. Except for perhaps Alec Baldwin,
Eleanor Cliff, Dick Gephardt, and Ms. Collins, almost all Americans
would rather spend $300-$600 themselves, than have the government
spend it for them. And something tells me that none of the anti-tax-cut
zealots are likely to be sending their rebates back to Washington
uncashed either.
In fact, tax rebate checks may be the savior of the Bush presidency.
My hunch is that that's what really has the Left so agitated these
days.
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