by Frank James
Washington is a go-along to get-along kind of place if ever one existed. And one of the latest ideas of the go-along variety was the fiscal stimulus package to mail rebate checks to most American households in an effort to jump start consumer spending and prod the economy out of its doldrums.
But not everyone wants to go along with the program on this one. For instance, Bruce Bartlett, a domestic policy adviser for President Ronald Reagan and Treasury official in President George H. W. Bush’s, is proposing that Congress and President Bush scrap the idea of sending out the checks
In an op-ed piece in today’s New York Times, Bartlett argues that the $117 billion would be better spent, say on a program to bail out the mortgages of millions of people facing foreclosure on their homes this year.
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.
How likely is Congress to just change its collective mind on the stimulus package?
Here’s where we cue the sound of crickets. Why would Congress want to bail out on the checks idea? It has received excellent political cover.
Despite what Bartlett says in his piece about “few economists” supporting the idea, no less than Federal Reserve Chairman Ben Bernanke told lawmakers that a stimulus that included rebate checks could prove beneficial so long as Congress acted quickly.
So Congress did act quickly.
It’s not that what Bartlett proposes doesn’t make sense. There are proposals on Capitol Hill right now to create a rescue fund for millions of mortgages.
But he can forget the idea of Congress reversing course on the stimulus checks. Both Democrats and Republicans have boasted to voters that the checks are on the way. So has the president.
To stop the checks, lawmakers in Washington would have to have faith that voters wouldn’t hold such a turnabout against them. Even after Easter, such faith seems far-fetched.
