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 epublicans
have struck political pay-dirt with the tax-rebate checks that are
now being delivered to the mailboxes of American taxpayers. For
weeks now tax-cut skeptics have been ridiculing these tax rebates
as financially irrelevant to most families, but I've yet to meet
anyone who isn't eagerly awaiting their $300 to $600 check from
the IRS. At parties, on talk radio, and in casual telephone conversations,
all anyone wants to talk about is how they're going to spend their
windfall.
Economists around are fretting over what the financial impact of
these checks will be. But it's really irrelevant what people do
with the money — whether they use it to pay down credit-card debt
or to buy a new car stereo system — it's their money, they should
do with it what they please. The checks are a deserved and appreciated
downpayment on the Bush tax cut.
This got me to thinking. Why not a send out an automatic tax-rebate
check every year that we have a tax surplus? The size of the rebate
check could be made conditional on how much of the surplus was not
frittered away by congressional appropriators and their voracious
appetites each year.
In other words, these tax-rebate checks could be the ultimate check
and balance against the stampede of federal spending. At the start
of each fiscal year, Congress should determine the size of the expected
non-Social Security tax surplus. Congress should then announce how
large the expected surplus tax rebate would be for the typical taxpaying
family. Under this new law, discretionary federal spending should
be permitted to grow no faster than the rate of inflation (CPI growth)
each year. If economic growth came in faster than expected, federal
revenues would be higher and the rebate checks would be larger.
If Congress raced through its own appropriations speed bumps, then
the surplus checks would be smaller.
And people like my wife, a prototypical soccer mom who doesn't care
a whit about politics, would be hopping mad that the rebate check
she was counting on from the IRS to help pay the plumber's bill,
won't be coming this year because it was intercepted by the rascals
in Congress who spent the money.
That's what's so ingenious about the automatic annual rebate plan.
For the first time in decades, fiscal conservatives would actually
have a political tool to increase support for trimming frivolous
spending whenever and wherever possible. Voters would now have a
direct incentive to keep the government's budget under a microscope
and to repel spending for grants to the Pillsbury Dough Boy. Every
dollar saved would be an additional dollar to be passed back to
income taxpayers in the form of a bigger rebate check. Election-year
pork-barreling would lose its "free lunch" appeal because
the marble-plated parking garages and the snow-pea research funds
would translate into funding available for a big rebate check every
July.
Who knows, if the plan works as I think it might, pretty soon we
wouldn't have any federal government at all, save for a few billion
dollars for a strategic defense initiative, the Supreme Court, and
independent counselors to investigate sex crimes on Capitol Hill.
Under this plan voters would think twice about rubber-stamping absurd
new entitlement programs, such as the prescription-drug benefits
for seniors. Young voters who want the rebate check to help pay
off their student loans would be butting heads with seniors who
want yet another multibillion-dollar taxpayer handout for free Viagra
pills. If voters were aware that the Senate prescription-drug benefit
for seniors, with its gargantuan $300 billion price tag, might mean
some $100 a year off their tax-rebate check, worker enthusiasm for
this new freebie entitlement might start to wane.
can just imagine the fun that people like Phil Gramm might have
with this new automatic tax-rebate plan. Gramm could announce, "gee
I'd like to support this $50 billion IMF bailout plan, but I can't
because it would mean that Texans would only get half the rebate
check they're expecting in '02." Emergency funding projects
would also be examined more carefully to determine whether, for
example, a few bad weeks of weather in Nebraska warrants a bigger
bailout of the farmers and a lower rebate for the rest of us.
Given that my forecast for this year is a 7% to 9% growth in appropriations,
coming on the heels of last year's 10 percent spending surge, any
plan that could create a political constituency for smaller government,
would make a lot of economic sense these days.
The Automatic Tax Rebate plan would also increase the political
likelihood of real tax reform in the next five years. If congressmen
realized they couldn't spend surplus tax dollars on ribbon cutting
ceremonies back home, then the case for creating a brand new spanking
clean tax system that is economically growth-enhancing, equitable,
and radically simplified would become far more persuasive to Congressional
members. Why collect tax dollars in the first place if you're prohibited
from spending them?
I believe it was Mencken who once called the federal spending process
an advanced auction on stolen money. Under this rebate plan voters
would start to realize that that the government funding that Congress
lavishes on us with such generosity was simply money stolen from
us in the first place.
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