How to even begin to line up the challenges facing the US economy at this time might be no real challenge to a bona fide economist but since the majority of American voters is only an “arm chair” economist at best, fundamental economics would need to be addressed and explained in such a way that the typical layman could comprehend. Since this is not likely to happen anytime soon, at least not in my lifetime given certain political realities, it would be responsible to consider what is at hand and try to make reasonable election-year choices. That is to say, whom we elect to the US House and to open US Senate seats in this election season is going to have a much more profound and lasting impact on the US economy than who is to become the next US president.
The current economic stimulus package before the House contains billions of dollars in incentives for individuals and businesses in an effort to “jump start” the economy since it is showing signs of losing momentum. So let us consider the analogy of jump-starting a car. The jumper cables in this instance could be the cash rebates that will be offered to all US taxpayers. However, even though the car will likely start with the “jump”, a problem will still exist that will require further mechanical analysis. Is the starter going bad, or do the batteries have to be replaced? The starter is obviously going to cost a bit more than simply replacing the battery but if a new battery is all that is needed, then we could say we got off cheap. But if we replace the battery in the vain hope that this is the only problem without considering all other possibilities which led to the need for a jump start in the first place, then the brand new battery and its expected life could be diminished because we replaced the battery to deal with a symptom without considering and addressing the core problem.
Well, I’m not an economist and I’m even less of a mechanic. I’m one of those who might break down on the side of the road and will raise the hood to have a look while my foot is propped up on the front bumper, but I will be pretty clueless as to what I might be looking at except that it is an engine and it is currently not working. As an “arm chair” economist who has had some college-level classes in economics and who tries to keep up with the political situation of the day, however, I will be pretty sure that there is a potential problem serious than a quick jump-start will address.
I can appreciate President Bush’s philosophy regarding the tax rebates he proposed early in his first term. The Clinton administration bragged about creating a surplus; Mr. Bush maintained that any surplus belongs back into the hands and pockets of those from whom it was taken. The government should ideally not have a budget deficit, but it also should not have a surplus of funds. To suggest that a surplus is the sign of a responsible government misses the whole point of the philosophical differences between the Democrats and the Republicans. Generally it is that the government is not inherently entitled to anything more than the public is willing to give. It is highly unlikely that the majority of Americans are OK with the US government having a surplus of funds while they continue struggling to make ends meet.
This term and this time around, the reasoning for the current rebate and incentives proposal is altogether under different circumstances but the philosophy remains the same: the economy needs the cash, not the government even if the government is facing not only a pretty hefty budget deficit but also a staggering, if incomprehensible, national debt. The blame game has been going on for years between Democrats and Republicans, but the bottom line is that the US taxpayer has done what he is supposed to do by paying the taxes. It is the US Congress that has failed. The current 18% approval rating (depending on which poll is used but was cited last night by news commentators prior to the president’s State of the Union address) is indicative of the reality that taxpayers are aware of the Congress’ failure to act responsibly. Then as if seeking to affirm the low approval rating, Congress would dare to suggest that American taxpayers will have to give up more of their hard-earned pay to make corrections, insinuating that the government needs the cash more than the working families who earned it.
The current incentives proposal before the US House has cash rebates to be paid to taxpayers, but the Senate has all but guaranteed that there will be more added to it by the time it comes before that body such as more in food stamps and an extension of unemployment benefits for those who have been out of work for too long. And that’s the rub, isn’t it? How much good will a few hundred dollars be for those who have been out of work for so long? At best, there will be groceries purchased or bills paid but the relatively small amount will be gone in less than a month. A job, on the other hand, will go a lot further and will provide much more help to the American taxpayer – and the government by way of payroll taxes – than a one-time, very expensive allocation of government funds.
I would much rather the Congress give US businesses more incentive to keep jobs in the US. I would much rather the US Department of Transportation end this experiment of allowing Mexican trucking companies to operate on US highways when US trucking companies are struggling to keep up with high fuel prices and low freight rates which will certainly be driven even lower. I would rather the Congress offer up tax incentives to US businesses according to the number of Americans who are hired or according to setting up in an already depressed region. I would much rather the US Congress seriously consider how expensive it is to do business in the US and then come to realize their part in creating this anti-business environment in an economy that demands it. Though I do not pretend to be an expert in international business, I think I would rather the Congress repeal NAFTA and let American business and consumers get back into the business of making commerce for consumption and jobs and, ultimately, additional tax revenue.
I will always welcome a little extra cash now and then. I would be much more appreciative, however, for a new job or other new opportunities. I do not ask for guarantees, but let’s be reasonable: I cannot compete with a worker in another country who can afford to work for less and whose employer is being given all sorts of incentives by the US Congress, the same Congress We The People helped to elect.
The Congress is about to offer us jumper cables. The truth, however, is that it is not the economic “battery” that needs a boost. There is something much more sinister afoot here. For the time, however, all we can do is to prop our collective foot on the US front bumper and just look under the hood, hoping that someone smarter and more experienced than we will come along with a genuine solution to a genuine problem.
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