A Word About Those Tax Stimulus Checks

by Buz Whelan

So the government is going to give me money. You’re going to get some, too. George Bush’s stimulus package even gives money to people who don’t pay any taxes. So It’s $300 for each of them, $600 for single tax payers, and $1,200 for married tax payers. I guess we should just be thankful, you know, don’t look a gift horse…that is, if the money is still worth anything by the time we get it.

There are only so many ways to create wealth. Mining and refining, for example. Agriculture. Manufacturing. Creating art and literature. If you’re lucky enough to have especially good weather, you can sell that to tourists who come from places with crappy weather. But printing the pictures of dead presidents on linen paper does not create wealth. And there’s the problem.

When you print money backed by precious metals or gemstones, it has value. If your money is backed by a vibrant manufacturing base or bountiful harvests that exceed your own needs of consumption, it has value. But when the money you print exceeds the value of these things in your economy, its value is diminished. When the discrepancy becomes great enough inflation reduces its value steadily until it is virtually worthless. This happened in Germany in the late ‘20s and early ‘30s. A loaf of bread cost a billion marks and more. Life savings were wiped out. The banking/monetary system collapsed. The road was paved for a dictator to save the nation.

Of course, that couldn’t happen here.

We’re fighting a war of choice that is draining twelve billion dollars a month from our economy. Trade deficits drain even more. Precious jobs from our manufacturing base are being shipped overseas at an alarming pace. It makes economic sense to import raw materials that are then used to manufacture exports. But we’re spending enormous sums of money to import natural resources, most notably oil, that we consume. And until recently we were encouraging people to buy homes and cars they couldn’t afford, further driving the gross value of private wealth downward. The current stock market trend is an obvious example of this loss.

All this is pretty simple stuff. Most of you already recognized everything I’ve described. But the federal government’s response, as embodied in the Bush stimulus package, is the really astonishing part.

What do you do to fight a sluggish economy complicated by inflationary trends? Apparently the solution is to print more money and send it to voters, voters who will presumably remember the Republican-sponsored largesse come November. Will John McCain be reminding us about this throughout the Fall? You think?

One problem many economists have cited is the overwhelming personal debt of Americans. Will these folks use the windfall to pay down debt rather than make commerce-stimulating purchases? Perhaps, but there is another problem. Where is the money coming from? The Clinton surplus is long gone, gone to unnecessary war and tax reductions that absurdly favor the wealthy. We are already over a trillion dollars in debt. There is no government stash from which the estimated $158 million can be taken. So, we are simply printing paper.

Is there any other way to stimulate this slow economy? Perhaps. Why not give Americans an incentive to shop American? Buy a car made in America and you get to subtract a per centage of the cost from your taxable income. Buy an American-made appliance and you get the same deal. Buy American, create work for American workers, get a tax break. The nameplate doesn’t matter. Ford or Toyota, if American workers put it together, you get the break.

We can only get so far by building each other houses and serving each other food. Let’s try something that will get the manufacturing base back to work. Let’s create wealth instead of debt.