By MARC MCDONALD
With the titanic cost of the Iraq War fiasco, along with his reckless tax cuts for the wealthy, George W. Bush has driven the U.S. economy off of a cliff.
Now, Bush aims to save the economy with an absurd tax rebate scheme, which will amount to about $140 billion, equal to about 1 percent of U.S. gross domestic product.
It's clear that this rebate scheme will be nothing more than a mere Band-Aid on a bleeding economy that is in deep crisis.
First of all, there's the matter of the nation's disastrous mortgage crisis. It's bad enough that 2 million people could lose their homes. What's equally ominous is that the housing bubble has been the main thing propping up the U.S. economy since Bush took office. Beside those losing their homes, some 44.5 million Americans will watch the value of their homes diminish.
Bear in mind that the "wealth effect" of inflated home values has been the main factor in getting Americans to spend money, powering our consumption-led economy.
The tax rebate of several hundred dollars that most ordinary taxpayers will get under Bush's plan may come in handy for many people who are paying off bills. But it won't save our rotten-to-the-core, faltering economy.
Even worse than the mortgage crisis is the ongoing U.S. deficit crisis that has soared out of control under Bush's watch. The U.S. national debt now stands at a staggering $9 trillion. That amounts to over $30,000 for every man, woman and child in the country.
The national debt is a ticking time bomb that Bush has completely ignored the past seven years. The Iraq War fiasco will add another $2 trillion to the nation's debt.
Bush and the NeoCons have never shown any concern about the deficit. But the East Asian nations that fund America's national debt are increasingly concerned.
Under Bush's watch, the dollar has taken a beating. This has added to the anxiety of nations like China and Japan, which hold trillions of dollars in their central bank reserves. The crisis is a vicious cycle: the more the dollar declines, the more incentive China and Japan have to sell their dollars (which, in turn, will force the dollar's value even lower).
When the dollar melts down in value, America's reign as a superpower will be over. Once upon a time, that seemed like a remote possibility. Under the disastrous Bush administration, it looks like something that could very well happen any day now.
During the brief period in his life when he tried his hand in the private sector, Bush drove all three of his companies into the ground. Despite the fact that his father and grandfather were powerful politicians, Bush was a bust in the private sector (even with his family's powerful connections and wealth).
Now, Bush is on the verge of doing to America what he did to his failed companies in the private sector. And its role in the collapse of America's economy is the main thing future historians will remember about this administration.
It's a crisis that Bush's tax rebate Band-Aid won't fix.
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And how will he pay for these rebates? By deferring the bill to our children. Our children who will most likely be middle class and pay for interest and debt from their disproportionate percentage of tax paid from their income. Percentage of income is the only way to measure who pays the most tax but the neo-cons won't recognize that. They perfer to look at dollars paid period. What would really work would be to roll back those tax cuts for the rich and redistribute them to the middle class and poor. Then the economy would be awash with investment in things like car repairs, groceries, clothing for kids, books, and maybe a little health care if enough money was left over.
I'm not so sure that Bush will only be remembered for what he did to the economy. There is a long rap sheet building of consitutional abuse, cronyism, politicizing justice, torture, and that little war for oil thing.
I think its funny when u get someone pouring out there heart about all of this. Number 1 i dont feel bad for anyone that is about to lose their home because they werent smart enough to get a fixed rate. What would you like the Goverment do for the houseing problem? They got them selves into it sounds like they should have thought things through before over extending themselves.Why is it that the families that cant afford their house has 2 new cars big screen tv all of their kids have cell phones and wear 85 dollar pants. So really why cant they afford their houses?
You want to fix things lets start here lets get rid of the welfare sytem(God knows Im tired of watching people pay with there foodstamp card then load there groceries up in there brand new cars and suv)How much money does that save the goverment?
And I dont want to beat a deadhorse but, Bush didnt screw up the economy, Why dont u quit listening to what the media hand feeds you and so some real research.
It's clear that this rebate scheme will be nothing more than a mere Band-Aid on a bleeding economy that is in deep crisis
band-aid! it is a charade, held together with smoke and mirrors.
there is ONLY one reason for this ridiculous gimmick (see my post, can I say great minds think alike -heheheheh)
to put the moribund and hanging on the edge economy on crutches through November --- so he at least tell the insane GOP loyal that he has helped the economy and they continue to vote for the lunatics who enabled him to ruin it
i am not an economist -- but ANYONE can see we are teetering on the edge of 1931 Hoovervilles or 1926 Germany (with the wheelbarrow economy)
sometimes i think president douchebag wants this economy to sink fast so he can declare emergency law and cancel the election (rather than wait for the terrorist attack).
and of course our brave and courageous congressional leaders (who also care more about smoke and mirrors for re-election than actually helping the country) will go right along......
also you realize the ridiculous rebate, even if people spend it goes right back to the Arabs (for gas) or China (for all the poisonous products).
love your blog
The so called Tax rebate is just the final blow to empty the treasury. It has no other purpose except to bleed the treasury and say "we're broke". Oh, and sorry about the Social Security. It's gone (to private companies).
Economic dislocations are the problem with an income tax system that is highly manipulable - subject to influence by lobbyists and continual revision by politicians, taxes business resources and payroll whose costs cannot be extracted from export prices and results in higher domestic price tags for consumers.
Clearly, the answer is in front of us - the FairTax; that's right, the same plan ardently advocated by Gov. Huckabee and demagogued by people like Bruce Bartlett.
The research makes a compelling case for every American wage-earner to get involved in voicing their support for the FairTax Act of 2007 (HR 25 / S 1025) that's been reintroduced into every session of Congress since 1999, and with growing numbers of co-sponsors:
Mr. Huckabee's advocacy of the FairTax is the single most important policy position in this election. Here's why:
The FairTax rate of 23 percent on a total taxable consumption base of $11.244 trillion will generate $2.586 trillion dollars – $358 billion more than the taxes it replaces. [BHKPT]
The FairTax has the broadest base and the lowest rate of any single-rate tax reform plan. [THBP]
Real wages are 10.3 percent, 9.5 percent, and 9.2 percent higher in years 1, 10, and 25, respectively than would otherwise be the case. [THBNP]
The economy as measured by GDP is 2.4 percent higher in the first year and 11.3 percent higher by the 10th year than it would otherwise be. [ALM]
Consumption benefits [ALM]:
• Disposable personal income is higher than if the current tax system remains in place: 1.7 percent in year 1, 8.7 percent in year 5, and 11.8 percent in year 10.
• Consumption increases by 2.4 percent more in the first year, which grows to 11.7 percent more by the tenth year than it would be if the current system were to remain in place.
• The increase in consumption is fueled by the 1.7 percent increase in disposable (after-tax) personal income that accompanies the rise in incomes from capital and labor once the FairTax is enacted.
• By the 10th year, consumption increases by 11.7 percent over what it would be if the current tax system remained in place, and disposable income is up by 11.8 percent.
Over time, the FairTax benefits all income groups. Of 42 household types (classified by income, marital status, age), all have lower average remaining lifetime tax rates under the FairTax than they would experience under the current tax system. [KR]
Implementing the FairTax at a 23 percent rate gives the poorest members of the generation born in 1990 a 13.5 percent improvement in economic well-being; their middle class and rich contemporaries experience a 5 percent and 2 percent improvement, respectively. [JK]
Based on standard measures of tax burden, the FairTax is more progressive than the individual income tax, payroll tax, and the corporate income tax. [THBPN]
Charitable giving increases by $2.1 billion (about 1 percent) in the first year over what it would be if the current system remained in place, by 2.4 percent in year 10, and by 5 percent in year 20. [THPDB]
On average, states could cut their sales tax rates by more than half, or 3.2 percentage points from 5.4 to 2.2 percent, if they conformed their state sales tax bases to the FairTax base. [TBJ]
The FairTax provides the equivalent of a supercharged mortgage interest deduction, reducing the true cost of buying a home by 19 percent. [WM]
ALERT: Kotlikoff refutes Bruce Bartlett's shabby critiques of the FairTax.
Yes the rebate is silly - but we are gonna love our 1200 dollars!
If they gave the rebate only to those people who WORKED for their money, that would be appropriate. As s rebate on FICA tax, in effect.
Because FICA tax is really an income tax in disguise, and screws workers and business terribly.
The Fairtax is an even sillier idea, however. Lots of people are looking at Fairtax now, people who aren't fooled by the something for nothing nonsense. Rebates are actually MORE logical than the fairtax -- and both are silly.
Okay everyone stop being so emotional. Quite honestly thats how we got into this mess. We believed all the hype from Bush after 9/11 that we fell into a freaken war. Granted war makes jobs, and got us out of the great depression, but when it lasts this long and its really over nothing it becomes useless. And as for the guy saying that the people who lose their houses it's their fault. You are partially right. Is it their fault if there company makes cutbacks and they get released from their job? I mean yes saving up can help but with no adding of funds it won't last long. I agree/disagree with the whole welfare statement. The time on welfare should definitely be limited, but to cut it off completely is not right either. If someone is a victim of circumstance you want to tell them oh well? All the problems that have ever happened in this country happened because a lack of thinking and too much emotional reactions plain and simple.
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