I thought that this would interest you all and hopefully you will pass this on to others. Tom McClintock was the Govenators opponent in the Recall election. He speaks all to truefull however to be elected by popular vote!
Notes on California
Tom McClintock's online commentary
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George McGovern's Revenge...
Published On 02-08-2008 , 3:04 PM
George McGovern was certainly one of the most hapless presidential candidates of the 20th Century. The perpetually unpopular and congenitally unlikeable Richard Nixon utterly crushed him in one of the biggest landslides in American history in 1972. It was a pratfall-a-day campaign culminating in a wildly over-the-top campaign promise to pay out $1,000 from the federal treasury to every man, woman and child in America. Even contemporary liberals like Hubert Humphrey realized what a farce that would have been: taxing money from one pocket to put money into the other.
Thirty four years later, we find that George McGovern’s most ridiculous campaign pledge – laughed off the national stage by Republicans and Democrats alike in 1972 -- is about to become law with broad bi-partisan support in Congress.
This is certainly not a tax rebate. As Rep. Louie Gohmert asked the President at the State of the Union Address, "How you gonna give a rebate to people who never gave a ‘bate?’” Of course you can’t because it’s not a tax rebate – it’s George McGovern’s 1972 campaign flop, and it doesn’t even make sense as a per capita grant.
According to published accounts, the rebate will add $168 billion to the nation’s deficit – to be repaid with future taxes – in order to provide varying handouts of up to $1,200 per couple plus $300 per child. But before you write that thank you letter to the local congressman, take out a calculator and do the math. There are 303.4 million Americans out there, meaning the average rebate should come to $553 per person, or $2,212 for a family of four. But the maximum grant that family of four can possibly receive is $1,800. So for that family, it means $2,212 in taxes out of one pocket to put $1,800 into the other. Obviously, there’s an awful lot of income being transferred.
Therein lies the rub: not only will this lunacy not stimulate the economy, it will do further harm. That’s not my analysis: it’s the conclusion of the quintessential supply-side economist, Arthur Laffer. To the extent that money is being taken from one person and given to another, Laffer warns there will be no net supply-side stimulus. It is true that if you give a dollar to one person, that person will be economically stimulated by that amount – but the person you have taken it from will be economically depressed by exactly that same amount. In other words, if one person has one dollar MORE to spend and the other has one dollar LESS to spend, the net fiscal effect is a wash. But the person who has one less dollar to spend now has a corresponding incentive to earn less or shelter more – ultimately depressing overall economic activity.
Supply-side economics, says the father of supply-side economics, only works by cutting the marginal rate of taxation. Reducing a family’s marginal tax burden by $1,800 would not only cost the treasury less, but would reward that family for earning more income or sheltering less – resulting in higher productivity. That, of course, is the one thing that Congress won’t even consider.
It brings to mind Mark Twain’s famous observation, “Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.”
2-8-2008
