Bailing out a leaky boat may be the only way to prevent it from sinking, but bailing out sinking banks with taxpayer dollars is no way to keep our economy from sinking.
I was one of the House conservatives who opposed the massive bank bailout last October because I didn’t believe that government was smarter than the stock market. And now that about $350 billion in taxpayers’ money has been spent without much success, I think it should stop right now. That’s why when Congress reconvenes — presumably Monday — I’ll introduce legislation to give all Americans a two-month income tax holiday.
Just think about how massive this bureaucratic nightmare has become. An estimated $7.7 trillion is being committed to bailouts by U.S. Treasury Secretary Paulson and Federal Reserve Chairman Ben Bernanke. Compare that to the $1.2 trillion that will be paid in individual income tax for the 2008 tax year. In a matter of months, these men have committed 6.5 times what people will pay in income tax for the entire year.
Imagine if instead of those billions being squandered through failed bailouts, Americans could keep their own hard earned tax money to use as they need. It’s too late to stop government from spending the first $350 billion, but it’s not too late to take the other half of the original $700 billion and give it to the American taxpayer to do with it what he or she chooses.
Instead of allowing Americans to use their own money to decide which companies deserve to be stimulated or bailed out, our government granted that power to one man who is giddily giving away (they call it “investing”) tens of billions of dollars each week in hopes something will re-create confidence in our economy. And it isn’t working.
One reason it isn’t working is that Secretary Paulson did too good a job convincing everyone that the financial sky was falling. He spent two weeks on national media proclaiming this. (After the bailout bill was defeated the first time in the House, I woke up the next morning and looked out my window. Sure enough, the sun was rising and the sky wasn’t lying in pieces on my front lawn). But economic fear is like the most contagious of diseases — easy to spread, but terribly difficult to stop.
The panic that Secretary Paulson helped create will have to be calmed by others.
After I discussed the matter with several colleagues, the idea of returning an entire year of income tax was not catching enough groundswell. The idea of ending the ability of Secretary Paulson to squander his last $350 billion on firms run by his former Wall Street cronies, however, was catching plenty. Pair that with at least two months of each taxpayer keeping his or her own tax dollars, and you have a great start to making people feel in control over and optimistic about their finances.
Newt Gingrich is one of the most amazing conservative idea people in the country. His and Jed Babbin’s suggestions and encouragement led to my current proposal of instating a two-month tax holiday during January and February 2009.
Already, some have questioned whether this will be too difficult for accountants to implement in preparing the paychecks for those two months. It will require NOT deducting the federal income tax withholding and NOT deducting the FICA from the check and the employer NOT rushing to make the employer’s payment to the IRS for the FICA. Some have wondered if that won’t really confuse accountants trying to figure out the 2009 tax return. Since January and February will be income tax-free months, then any ordinary income during those months would be tax free. That should be easier to figure than the Alternative Minimum Tax!
One question I have heard is, “Won’t some people be tempted to put some of that money in the bank instead of spending it?” Consider that one of the biggest problems with the economy has been the lack of confidence. That fear must be calmed, and our Wizards of Loss in Washington have not helped. If some Americans finally put a little nest egg or emergency fund in the bank, everyone will win, but especially the market and the economy.
Another question has been whether this proposal will put money in the “hands of the people who have caused our economic problem.” Consider that Secretary Paulson and Chairman Bernanke have been spending hundreds of billions of dollars trying to “loosen up the credit logjam” in order to create more borrowing in America. Also, consider that another purpose has been to help allow those delinquent on their mortgages to refinance or borrow money to catch up.
Then comes the most important question: “Is there even a snowball’s chance of this getting to the floor of Congress for a vote?” Well, that depends entirely upon the American public — the same public that flexed its persuasive muscles in August and September when it made clear that Democrats might jeopardize their majority if they passed another moratorium on drilling in the Outer Continental Shelf while fuel was so terribly expensive.
With their overwhelming feedback, the public helped Conservatives to defeat the McCain-Kennedy immigration “reform” bill, persuaded the Democrats to give up (at least temporarily) on the offshore drilling ban, and won battle after battle in the last Congress.
The public speaks with a powerful voice. If we raise that voice to Speaker Pelosi, we will be heard and we may well be able to get this bill to the floor.
The bottom line is that the bill will give you more of your money; we will make the case for doing so. But if the American public decides that it is just not smart enough to spend its own money and needs someone in Washington to do it for them, Washington has certainly shown that it can do so.
On the other hand, if the American public decides they are sick and tired of their hard-earned tax dollars being squandered with people who don’t deserve it, and that the public can’t really do any worse with their own money, then its loud voice will be heard, and, for two months, the American taxpayers will get all of their money.
To make this happen, voices must be raised to each and every Representative and Senator to quit letting arrogant D.C. bureaucrats throw money all over the horizon and let people keep some of their own. Americans will get whatever they demand. Americans choose. Please make your voice heard.
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