You can’t put it off any longer.
After sorting through old records all weekend, tonight — if you’re one of the many procrastinators — you’ll punch a long list of W-2s, Form 4797, Schedule D, Form 3903, etc., into your tax program.
At last, you hit “calculate” and the elusive number appears on line 76: You owe the U.S. government $437.
As you write out the check, you take brief consolation in the thought that you’ll soon get a “stimulus” check from Washington for more than you just paid in back taxes.
But you can’t help asking: What’s the purpose of thus darkening the skies with criss-crossing tax dollars? Is the federal government really making sound use of your money?
The answer is clear: no.
The $168 billion stimulus package proposed by the Bush administration and approved by Congress was entirely paid for by borrowed money, after all. It will probably push this year’s deficit well above the historic high of $413 billion.
The government’s fiscal cheerleaders are urging you to spend that money to boost the economy. But is borrowing money from China so we can buy more imports from China really a blueprint for new jobs and sustainable growth in America?
History also is clear: no.
Bush tried this trick before, with his 2001 income tax rebates of $300 or $600. That time, at least, the rebates came from the healthy surplus Bush inherited from the Clinton years. But a survey found only 22 percent of households receiving the rebate intended to spend it. The rest earmarked the windfall for savings or used it to pay off debt.
This year’s rebates are likely to be used in similar fashion, proving the American people are more frugal than their government.
But then, who isn’t? Under Bush, the federal government now owes a stunning $9.4 trillion. About $5.4 trillion of that debt is owned by the general public (including foreign creditors) and $4 trillion by other government agencies, most notably the Social Security Trust Fund.
That Social Security trove supposedly ensures the solvency of that vital “safety net” until 2041 — but the federal money managers have really been using those surpluses to underwrite runaway spending and dubious tax cuts in other areas. That means when baby boomers start retiring in force, the government will have to start drawing that fund down in 2017, just nine years from now. At that point, Social Security may still be technically solvent, but practically every other federal program, including Medicare, will be at risk.
Is there a way to stimulate sustainable long-term growth? Sure. For individuals, how about extending tax credits for college education, boosting Pell Grants and cutting student loan rates? Investing in “human capital” by giving citizens the tools to become more productive is the best long-term “stimulus strategy” of all.
Likewise, for business, boost tax write-offs for investment in new and more productive equipment.
But until Congress and the White House adopt such a responsible program for long-term growth, this endless parade of ill-conceived giveaways of borrowed money amounts to the kind of woeful long-term policy the late economist John Maynard Keynes warned against with his celebrated remark:
“In the long run, we are all dead.”
