Common Sense Economic Stimulus

Our Illustrious Leader's tax plan is, for the most part, based on giving breaks to investors. The thinking goes: put money into investors' hands, they will buy stock, pump up The Market, businesses will have funds to use to buy equipment, hire people, etc. Voila. Economic Recovery in time for Dubya's 2004 re-election campaign.

Call me cynical, but I just don't see that happening.

First of all, a better way of creating jobs is to create demand for products and services. One way to do that is to put the money in the hands of the people most likely to actually spend it, namely those folks who need or want to buy stuff, but who can't or are hesitant because of the economy. As demand (or more accurately the ability to pay) grows, businesses will boost production and hire more people.

Putting money in the hands of people who already have enough simply won't do that. Let's face it, a household with an annual income of $300,000 -- a household that would get a hefty tax break under the proposed plan -- can probably afford a new refrigerator, car, TV or other item. It's the folks making $20,000, $30,000 or $40,000 annually who need help with those major purchases.

Second, companies that offer stock are particularly beholden to stockholders. We've seen it countless times. Companies willing to cut expenses and boost their bottom lines to pay dividends and be attractive investments. There’s no guarantee that companies taking their new cash infusion will automatically hire scads of people. They're going to look after their bottom line -- and their executives' pockets -- first.

Third, my guess is that most businesses don't offer stock. They're privately held. So making all this cash available for investment won't help them. What would help is creating the ability of people to buy their products by putting money in the hands of the people most likely to spend it -- the vast majority of households' way down on the economic food chain.

As one observer said, if Bush wants to pump up The Market, why not just take the money and buy stock directly, rather than trust the country's undeserving upper crust to do it?

But then, I'm not looking to line my re-election campaign pockets with rich folk’s money.

© Copyright 2003 Keith Jameson. Last update: 1/25/2003; 10:15:37 AM.