The conservative Washington Post editorial page called George Bush’s economic proposals in his state of the union speech “The Lollipop Budget.” It indeed did appear to have something for almost everybody at first glance.
But at second glance the speech was vintage patrician Bush. He asked no sacrifices from the rich and powerful except one. He wants business and other rich convicts to pay an annual rent of $18,000 for their prison cells. For the rich who are not in jail, he offers a sharp capital gains cut. The bulk of the tax benefits, should Congress concur, would accrue to the top one percent of America’s richest.
For the middle class, he offered a $5000 tax credit for purchasers of new homes. Quickly the papers reported the next day that about-to-be home buyers are delaying their purchases to wait for the possible tax credit. Not exactly a stimulant to the economy.
Then there is the additional $500 per child exemption. The Wall St. Journal’s Alan Murray commented on television that families would have to be earning over $60,000 a year to get any significant benefit and they need to have lots of children. Clearly, poor people who pay little or no tax will hardly feel any monetary relief.
What about the withholding tax reduction to free up money for consumers to spend now? Well, what about what former IRS Commissioner, Sheldon Cohen, described as the shrieks of people come April 1993 when instead of a refund they have to come up with some real money fast.
And so the gimmickry and lollipops spilled out. Testifying before Congress the day after Bush’s speech, Federal Reserve Chairman, Alan Greenspan, dryly observed that there were not enough major provisions in the President’s economic stimulation package to do much damage.
But there is a pathos to Bush’s high expectation address last week. Presidents get too much credit for good economic tomes and too much blame for bad economic times. After all, this is still an overwhelmingly private enterprise, big business dominated economy. Reagan and Bush have given big businesses tax breaks galore, de-regulation of their marketplace and workplace misbehavior, support for their exacting concessions from workers, and “go” signal for the greatest corporate executive bonanzas in American history. Moreover, now they have low interest rates and politically-steered government contracts along with huge and diverse bailouts, subsidies and giveaways.
And still, many of these big corporations are demanding even more federal welfare and largess.
Maybe Bush should have devoted more paragraphs in his speech to assisting small business by enforcing the antitrust laws focusing on proven stimuli for entrepreneurship. Maybe he should have looked inside Washington to advance a more level playing field between small business and big business. It does seem true that small business is free to go bankrupt, while big business goes to Washington when it is crooked, or mismanaged or declining from pure remote, self-indulgent greed in the top executive suites.
George Bush doesn’t seem to know where to turn to next. While he figures out what to do next, he better get himself up to New Hampshire and listen to the people there.