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opinion:
our view
Rebates too much
too soon
With the news this
week that the budget surplus will be much smaller than originally
anticipated, democrats have called the wisdom of President Bush's
enormous tax rebate into question.
If the projections
are as bad as anticipated, Medicare funds will have to be
used to keep the federal government functioning.
Add to this news
the Federal Reserve dropping interest rates for the sixth
time this year in order to stave off a recession, and the
economic outlook for the immediate future does not look rosy.
As is often the
case when discussing matters economic, it takes months or
even years for minor shifts to have any discernible impact
-- interest rates cuts, for example, usually take a year to
have an effect.
So it would be
slightly unfair to hold Bush responsible for the overall state
of the economy since he inherited what Clinton left him.
We can, however,
hold him responsible for the early Christmas bonus to America,
otherwise known as the "tax cut that mostly benefited
the rich." The rebates were intended to jump-start the
lagging economy, but that is not where most of them ended
up.
According to a
recent Gallup poll, 30 percent of Americans polled spent their
rebates on paying off existing bills and another 28 percent
invested their newfound money.
Throw in the 15
percent who chose to buys groceries and the two percent preferring
charity to personal frivolousness and that does not leave
much of the overall pie for the lavish spending Bush intended.
If, by the time
next year's budget is upon us and we are no longer in the
black, the wisdom of Bush's generosity will be even more questionable.
The immediate effects
of this latest rate cut will likely be minimal, and the immediate
effects of the rebates are only being felt at banks.
How Bush and Congress
respond to a further slowing by the economy, either by throwing
more money back at taxpayers or by reinstating cut spending
programs, will have more of a lasting impact on our financial
well being.
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