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Groucho Had It Right...
The politicians in Congress have wandered back into town from their 5-week vacation, and they are looking for trouble. It was the comedian Groucho Marx who once defined politics as "the art of looking for trouble, finding it everywhere, analyzing it improperly and then applying the wrong remedy over a long, long period of time."
And so it is now, due to the continued slowdown in the economy, that the nation's budget surplus has shrunk, and it will be at this important moment that the democrats will pick up the theme that the nation cannot afford the president's tax cut plan. Of course, one has to remember that as late as last October and November, the democrats were busy trying to convince all of us that the economy was just fine and there was no slowdown at all. They proved to be wrong, in fact, very wrong. We were told at the time that the candidate George Bush was busy trying to stir up concerns that didn't exist.
It turns out that the candidate George Bush was all too correct in his worries about the weakening economy, and now, as was the case repeatedly over the past eight years, the people who ignored the problem as we slid into an economic mess, are now the chief critics of the poor guy who just showed up and is trying to fix it.
The curious thing about all this debate on whether we can afford the rebates or not, is that Washington, historically dominated by democrats, both in Congress and the executive branch, has typically used times of slowing economies to cut taxes and put some money back into the peoples' hands. This is, by the way, classic Keynesian economics. With the economy so weak, and teetering on the brink of a recession, they want to make political capital by scaring us into believing that we cannot afford the tax rebates we've been receiving. The administration contends, I think, quite correctly, that those rebates are very necessary to stabilize the economic slowdown and regenerate a new wave of growth in the economy.
I've talked before in this space about the fact that it isn't $300 per person or $600 per couple, it is, in total, $38.8 billion coming back in the months of July through October. This money will be used for back-to-school, and what isn't used in that direction will probably be fully used for the now not-too-distant holiday season ahead.
In the meantime, the surplus is still expected to total around $155 billion. Admittedly, all of that is earmarked for the Social Security system. With good intentions, both Congress and the White House pledged not to touch that part of the surplus in the coming years, but nobody, least of all the democrats, expected the economic slowdown, and the rebates and other portions of the president's tax relief programs, most of which will not become effective for several years, have in truth nothing to do with the current Social Security pay-outs. The Social Security surpluses have to be held in tact for the "out years" after about 2037. Most experts then agree the system will be out of money unless something is done. Interestingly, the democrats don't favor fixing the Social Security system either, in any meaningful way by changing its obsolete structure-that's another article for another time. This is not about Social Security or its protection, its about pure and simple politics.
In fact, it will be interesting to see how these opportunists maneuver in the weeks ahead; will they actually dare to stand up and say, 'Give the money back!?' I doubt it. They'll just flail and rail and complain and get plenty of airtime and newspaper space from their friends in the liberal media but in the end, after the shrill partisan voices have long gone, we'll keep our tax relief, the economy will regenerate itself, the big surpluses will be back, and next year at this time, the talk will probably center on yet another tax cut, because as everyone, including Fed Chairman Alan Greenspan, agrees, too much money in the coffers in Washington, in the form of surpluses is not good-it will just get spent by Big Brother on programs to solve problems that to quote Groucho, have been "improperly analyzed and then will have the wrong remedy applied over a long, long time.
(Tom Butenhoff is a First Vice President with J. E. Liss and Company, Inc.
in Milwaukee. The views are his, and not necessarily those of Liss
Financial Services or the Job Connection/Hiring
Network.)