There is no question that our economy is in trouble. We all know it, and the President acknowledged as much in his State of the Union speech (Monday) night. But the solution isn’t HR 5140, the economic stimulus package that passed the House of Representatives (Tuesday).
I voted against this legislation because it provides too little too late – if the economy needs a jumpstart now, what’s the point of sending checks in June, five months from now?
Congress can give the economy the immediate shot in the arm it needs by eliminating federal income tax withholdings for a month or two. This would give wage-earners a boost in their take-home pay next month, which they can spend as they see fit.
Moreover, individual income tax rates could be adjusted so taxpayers won’t be hit when they file their 2008 tax returns.
This makes more sense than mailing rebate checks. We’ve done this before – Congress passed legislation a few years back which included tax rebates. But while rebate checks are helpful to consumers, they have shown to have little impact on improving the economy.
For example, when Congress offered a rebate in 2001, it was discovered that less than a quarter of households surveyed intended to use their rebates on purchases. Instead, most planned to save the money, or use it to pay off their debts.
Under the new stimulus package, nearly 35 million people who paid no federal income tax can expect to receive a $300 check for each person in their family. This isn’t fair – it’s income redistribution, and it renders these rebate checks as government handouts disguised.
Rather than telling the country that the check’s in the mail in June, Congress should do the right thing now. To truly stimulate the economy, Congress should put money into taxpayers’ pockets in the quickest and least bureaucratic way possible.
After all, remember that in 1979, when Wisconsin was experiencing its own financial troubles, then-Gov. Lee Dreyfus stopped state withholdings for a few months. This helped put more money in the pockets of Wisconsinites, which ended up putting more money back in the state’s economy.
It worked for Wisconsin in 1979, and 29 years later, it’s still a good idea for the rest of the nation.
Congressman F. James Sensenbrenner (R-Wis.) represents Wisconsin’s Fifth District and lives in Menomonee Falls.