Wednesday, 21 January 2009

Pay Your Way

When it comes to the current financial crisis, does it ever occur to you that the suits (pantsuits included) don’t really know what’s going on? Talk about multi-billion dollar leaps in the dark – each backed by battalions of experts who assure us that if we stop to consider we will consign ourselves to eons of recession, depression, you name it.

And then you take a glance at the minutes of the Federal Reserve Board and find that those particular economic mullahs were gob-smacked when the whole financial system was going to hell in a basket in the last months. Some of them weren’t even sure that we’ve been in a recession for well over a year. They should have consulted anyone who makes ends meet on a paycheck or, even worse, a fixed income.

Something has to be done to get the country back on track again. But is giving everyone a government handout the best solution? Not that I’m going to refuse the proposed $1000 tax rebate, but I won’t be spending it on a new iPod. No, I’ll be saving it for the day of reckoning that’s already roaring down the Pike.

Of course we should invest in the infrastructure of the country – “shovel-ready” projects or not. That’s Keynesian economics at its best. And it shouldn’t just stop there. Investing in education and health care is no longer a choice but a necessity.

But I worry about the hole we’re digging – the trillions that must one day be repaid and the effect it will have on the national psyche if we just pass on this debt to future generations.

Government – long scorned and eviscerated - is finally sexy again and every master of the universe from Detroit to Wall Street is standing in line with his hand out. But government doesn’t come cheaply. It can eventually only give out what is taken in and we cannot borrow indefinitely.

And just supposing this new stimulus doesn’t work? Then what? Shouldn’t we reconsider the “trickle down” handouts of this stimulus? For eight years, we’ve cut taxes while fighting two wars and look where it got us. By the way, thanks for everything, President Bush: two and a half million jobs lost in 2008, over a trillion of a deficit, not to mention the shattered lives of millions in your Iraq misadventure.

The country is crying out for leadership and here’s wishing President Obama the very best. Personally, I don’t share his faith in his economic advisers, Summers, Geithner, Rubin, et al, because each has in the past favored either financial deregulation or indiscriminately cutting taxes – or both.

Maybe I’m just old fashioned but I believe in paying my way. With that in mind, here are a couple of short-term solutions that would have lasting social and economic reverberations.

How about we pay for whatever war is fought on our watch and not charge it to our Chinese credit card? I’m not so sure we’d be in such a hurry to support President Karzai and our opium-running Afghan allies if it came out of our paychecks every week.

Paul Krugman’s idea of a small federal charge on each stock exchange transaction is definitely worth a shot. It would raise billions annually and limit both speculation and our daily rollercoaster Dow rides.

And even though it will hurt many of us – now that gas is cheap, slap on a federal tax of a dollar per gallon. The money raised could go directly to rebuilding the infrastructure and improving mass transportation, while lessening our dependence on petro-dictatorships. Hey, might even improve the air and save a polar bear or two.

Ideas like these call for self-sacrifice but it’s small potatoes compared to what was given up in World War Two. Then again, the Greatest Generation had a core belief – pay your way. Might be an idea whose time has come round again.

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