Spend It If You Got It
The House last week passed — unanimously — an all but meaningless resolution encouraging Americans to use their $600 tax rebate checks “to purchase American-made goods and services from American-owned companies.” And that’s well and good, but there are perils here as well. It wasn’t long ago that America’s savings rate went negative for the first time since the Great Depression — a model that worked in an era of cheap oil and easy credit. But those days are over, at least for now. So a question for Congress might be: with both unemployment and food prices rising, is now the time to encourage us to buy shoes and plasma TVs, regardless the label of origin?
Recall that the $168 billion stimulus package was funded with borrowed money — a gift from Congress that’s sure to outlast our $600. Writing in today’s Washington Post, Sandra Day O’Connor and James Jones warn of the hazards if Congress continues to take the easy way out by borrowing its way through the budget process:
Rather than raise taxes or modify benefits, our leaders could continue to follow the path of least resistance, shifting even greater burdens onto the young and endangering the living standards of everyone else in the process. Brookings Institution senior scholar Isabel Sawhill, writing in this month’s Democracy Journal, warns of “realistic” budget deficits so large that by 2017, annual interest payments on the national debt would total $500 billion — three times the amount of annual war spending in Iraq.
And there’s another glitch in the “spend-it-if-you-got-it” argument: many consumers have yet to receive the cash. As Dow Jones’ MarketWatch reported last week, the Treasury Dept. has sent out only about half of the estimated 130 million checks due for delivery this year.