Stoking economic fears
They say money makes the world go round, and with all the dollar signs in recent headlines, you might think it was going to spin out of control.
There’s anxiety in the financial sector, talk of tax cuts, and a looming fight over the federal budget. And, as usual, liberals and their congressional allies have been stoking fears about the economy’s health and all but inciting class warfare — all while touting proposals more likely to bruise and batter the economy than invigorate it.
On Wall Street this week, concerns about housing-market volatility provoked calls for a bailout. Sen. Charles Schumer, New York Democrat, made noise about a possible market intervention through government-sponsored mortgage companies Fannie Mae and Freddie Mac. “There’s a prominent notion that the regulators should get together and do something,” he recently told reporters. But of course, regulators are exactly who should not tamper with the financial markets. Sarbanes-Oxley compliance already costs U.S. companies $6 billion a year. Market downturns hurt, but ladling on the bureaucracy would be like handing a glass of sand to a man dying of thirst. Better to let the market adjust on its own than add to the pain.
If anything, government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac should be cut off from their privileges as semi-public companies. Because both are implicitly backed by federal funds, and thus appear safer to investors, they have a disproportionate share of the mortgage market. Thanks to their special status, these two companies essentially get to run the mortgage race wearing jet packs — meanwhile, all their competitors that lack the advantages afforded by taxpayer dollars are stuck trudging along on the ground.
At a press conference on economic issues, President Bush seemed to indicate he was considering lowering corporate tax rates. One reporter sneeringly asked, “Do you believe America’s corporations are not making enough money these days?” Somehow, the reporter got the idea it’s the government’s job — or better yet, the press’ — to decide how much is “too much.” Never underestimate liberals’ ability to confuse someone else’s money with their own.
Mr. Bush later clarified that he intends only to propose simplifying the tax code for companies rather than actually lowering the rate. It’s a shame, though, as America’s high corporate tax rate threatens to cost it its competitive edge. Right now, the United States has the second-highest tax rate in Organization of Economic Cooperation and Development, and many member countries, including Germany and the United Kingdom are further decreasing their rates. Even France has suggested it may lower its corporate taxes in the near future. What’s the world coming to when France treats corporations better than the U.S. does?
And then there’s the budget, and the simmering battle between the president and the liberals in Congress. Mr. Bush has never been known as a diehard fiscal conservative, but big-spenders in the House still have him beat. Led by Speaker Nancy Pelosi, the House has passed appropriations bills totaling $23 billion more than the president’s requests.
Just as in years past, the appropriators’ ideas for how to spend taxpayer cash were anything but appropriate. Among the proposed projects was Rep. John Murtha’s bid for $1 million designated for the Center for Instrumented Critical Infrastructure. Too bad Mr. Murtha, Pennsylvania Democrat, when challenged, couldn’t even show that the center exists. First we had the Bridge to Nowhere; now we’ve got the Imaginary Center.
As if all this weren’t enough, the House recently passed an energy bill that included $16 billion in new taxes on oil companies — the better to raise your gas prices. It seems as if congressional liberals are intent on adopting the tagline made famous by McDonald’s, but with a twist: billions and billions taxed.
Economic common sense hasn’t exactly been popular as of late, and few legislators on both sides of the aisle are willing to fight for taxpayers and economic growth. More and more, it seems legislators talk of fiscal responsibility during election season only to legislate according to what might best be called the Steve Miller Band Model: “Go on, take the money and run.”
Many argue this sort of economic shenanigans is necessary, an inescapable outgrowth of voter-driven, democratic politics. But conservatives in Congress would do well to remember that, rather than succumb to the temptations of Washington and send home the budget bacon, the better strategy is to let taxpayers keep their hard-earned cash to begin with.
Peter Suderman is a writer at FreedomWorks.
