Like everyone else, Iâ€™m not going to turn down my tax refund that will arrive this May. But that doesnâ€™t mean I think the giveaway is a good idea. Like most economists, former Reagan and Bush I official Bruce Bartlett agrees. Writing in The New York Times, he offers a more prudent plan:
We need to stop and ask whether we can afford to spend $117 billion that the Treasury Department does not have on a program of dubious effectiveness. It simply makes no sense to send out checks to people who have no need for it as some kind of election-year bribe to vote for incumbents of both parties. That money would go a long way toward cleaning up the mortgages that are poisoning the financial sector.
Congress should immediately repeal the rebate and redirect the money that has been budgeted into a package of measures that would help the housing sector and those people who actually need assistance. The Treasury might use some of the money, for example, to enable Fannie Mae and Freddie Mac, the government-sponsored housing agencies, to buy up some of the bad mortgages, get them off bank balance sheets and help homeowners refinance them.
Of course, Congress wonâ€™t repeal the rebate. Weâ€™ll get our free money. It wonâ€™t stimulate the economy but our representatives and senators will still take credit for having â€œacted.â€