Focus Point - RebatesCommentary by Pete du Pont
April 02, 2001
I'm Pete du Pont with the National Center for Policy Analysis. It's been comical watching congressional democrats crawfish on giving you your money back. First, any tax cut was bad. Then, $250 billion was ok. Then $900 billion. Now, seeing that Bush is starting to make inroads into public opinion, it's a tax rebate -- a way not to do the right thing, and a bad idea on its own merits.
We tried it 26 years ago. The tax reduction act of 1975, enacted in a deep recession, was supposed to provide the economy with a quick stimulus. Checks were mailed out adding $8 billion to disposable income - close, in today's dollars, to the proposed $60 billion rebate.
But people didn't spend the money in 1975. They saved it, proving what's called the "Permanent Income Hypothesis," developed by nobel laureate Milton Friedman.
Simply put, it means if you think income's permanent you spend it. If it's a one-shot deal, you don't. Only an income tax rate cut will significantly increase consumption. So the democrats are playing politics, not helping you.
Those are my ideas, and at the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, the safe market.