Columns » Ernest Dumas

Rebate an empty gesture

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President Bush and congressional leaders put aside their acrimony long enough to agree to send a check to nearly everyone in America with a regular job and a tax cut for every company that is so prosperous that it plans to expand.

It is a bonanza for both the president and Congress, which have job-approval ratings below 30 percent in an election year of smoldering discontent. All of us 117 million who will land a government check in late spring or early summer will feel a lot more charitable about the men and women we elected to national office.

But that is just about all that the rebates and tax cuts will do. The old Keynesian theory about a debt-driven government stimulus — that it will juice a moribund economy back to life and lift those who are hit hardest by the bad times — doesn't apply much here.

The people who hurt the most and would spend the money the most productively and quickly — the jobless, the disabled, the elderly poor — will get no relief under the stimulus bill that Bush and the House of Representatives negotiated. The rebates will not arrive until late May at the earliest and much of the money, if it is spent quickly at all, will purchase imported goods and do nothing to stimulate native production. Almost a quarter of manufactured goods bought by Americans now are from abroad and the share is larger for goods that are not staples of life.

Senate Democrats produced a better bill that would help millions of the neediest Americans, disabled veterans, people living on Social Security and the chronically unemployed, but Bush is adamant that the government not send anyone a dime that cannot be cleanly described as a tax cut. To George Bush, words — two words, anyway — have meaning.

The House Democratic leaders did squeeze two concessions out of the president. He wanted the $600 checks to go to Paris Hilton, Bill Gates and every wealthy American and none to wage-earners who paid payroll and excise taxes to the hilt but who did not earn enough to owe income taxes or at least enough to bother filing returns for their meager refunds. Bush surrendered on those points in exchange for the Democrats agreeing to hastened depreciation for corporations.

The idea of the stimulus was not to lower taxes — not even Bush is arguing that the government can stand that now — but to stanch the economic slide, stimulate production, limit the human pain of the economic downturn and do it all quickly.

There were ways to reach all those objectives that might have been in tandem with giving prospering taxpayers a handout: extending unemployment benefits for the chronically unemployed, expanding home heating assistance to poor households, rebates for the disabled and people living solely on Social Security and increasing food stamp allotments, which have shrunk in value owing to sharply rising food prices. Except for the rebates for the disabled and retirees, all those could be dispatched into the economy immediately without waiting for the Internal Revenue Service to reprogram its computers after the tax-filing season.

“They gave up pieces of the package that were more effective,” said Jared Bernstein, an economist at the Economic Policy Institute. “It's a political choice, and a bad one. It's an ideology that says, ‘I can get a lot more credit for tax cuts than I can for expanding unemployment insurance.'”

The administration's latest jobs report this week should be instructive. The economy lost jobs in January for the first time since the early Bush years. The number of discouraged workers — those dropping out of the labor market — is rising and the number of adults who are not in the labor force has risen from 70 million in January 2001, when Bush took office, to nearly 79 million last month. You can track the abysmal trend yourself by clicking on the dinosaurs on the Bureau of Labor Statistics website.

Nothing would reach the economy sooner or serve humanity better than increasing home-heating assistance, which Gov. Beebe and the state's congressional delegation urged last week. Instead, Bush's budget plan this week dramatically slashes the Low-Income Home Energy Assistance Program, which helps the poor keep the stoves burning in winter. Even in southerly Arkansas the need is urgent. The president of Entergy Arkansas estimates that a fifth of Arkansas utility customers live at or below the federal poverty line, and for most of them a steep gas or electric bill in the winter means enduring cold or cutting back on other necessities like food and medicine.

As fuel costs escalate, electricity and residential rates are rising. Ask the people of North Little Rock. The spot price of natural gas is supposed to exceed $8 an mcf this January and February, up from an average of a little over $7 last year.

A government concerned about rising economic travail might find this a way to help.

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