By Maren L. Hickton
Every day millions of Americans buy insurance to protect
themselves from assorted risks. This money is pooled together
and contributed to a general fund hoping that there is enough
money in the general fund to take care of all claims. The
size of the insurance industry is proof that people are eager
to pay to avoid risk. They pay and get nothing if they are
fortunate enough not to have to file a claim, and they break
even if misfortune strikes a blow.
In the same way, we pay taxes. Taxes are our insurance, providing
the funds necessary to take care of a range of government
programs as a means of protection from risk.
Risks include threats to our sovereignty -- protection from
the destruction of war with the umbrella of our armed forces,
our military: the best group of trained men and women in the
world. Risks include ensuring that we educate our young people
-- for they are our future -- and to be equipped with the
fast pace of progress, to find their most optimum place in
our society they must be educated to find jobs to meet all
Risks include having sufficiently pooled funds to care for
and maintain our crumbling city infrastructures: buildings,
highways and bridges -- so that we may live and move safely,
without obstruction or fear. Risks include making sure that
we have enough money to explore the earth for fuel resources
to heat and cool our homes and operate our transportation
systems, to perfect our technology so that we can partner
with other nations to protect the earth from hurting itself
Risks include assisting many businesses when they need help
in developing and competing in the world globally, so that
they can continue to employ us, because without jobs we will
have no tax money at all to pool together, with those unemployed
or underemployed unable to purchase, reducing the GDP. Jobs
are the number one reason we do have wealth.
Risks also include taking care of the health and well-being
of all Americans, no matter what race, creed or sexual persuasion,
providing funds to address unexpected illness or disability,
as we surely know, when we say, "It only happens to them,
not me," is false. We also need to take care of our aging
parents and grandparents because without them, we wouldn't
be here. These respected American matriarchs and patriarchs
deserve our care and, often, do not have the security of financial
resources or extended family assistance to care for themselves.
It's easy for our President to promote a tax cut; it requires
no leadership, little thought, and has always been a popular
choice in politics. It is easy for our President to dump responsibility
on the states, states who ultimately will have to raise taxes
to support established programs that the federal government
does not want to steward any longer. Many Governors across
this country interestingly welcome this feat with the promise
of more "power," while they will have to contend with developing
increased management systems, less federal support, more expense,
and may, in the process, risk their own political futures.
The current President and his administration do not want
the responsibility of moral hazard. That is to say, they do
not trust our government representatives in the House and
Senate to use our taxes wisely. They fear that the funds will
be misused if they are left in the coffers, that they will
be tempted to give the money away to special interest groups
that lobby Washington -- groups that may clearly demonstrate
business, social or other needs. They fear that if an individual,
business or group is in distress and the government provides
aid, that it will encourage more people to put themselves
in distress to require more aid.
I believe the current administration is wrong. I believe
they are selling Americans short. Welfare Reform with its
WtW Grants Program is just one example of proof of this. Federal
subsidies invested in this effort seem to be resolving many
of the implementation challenges of this program, according
to the Urban Institute, a nonprofit, nonpartisan organization
in Washington, D.C. Americans are reaping billions of dollars
that they invested in assisting people in getting back to
work as a result of this effort.
What is harder for our President is to provide leadership.
Real leadership involves hard work with a prospectus designed
to positively influence the people of this country and not
scare us, telling us that "the economy is sputtering." President
Bush, instead, has an opportunity to truly be an "invisible
hand" in contributing to this nation's wealth by vesting all
of us with a right to participate in the correct use of our
taxes and the surplus, an opportunity for us to participate
in investment future, while at the same time taking care of
those in need.
Rather than stumping to promote his own dated program, he
could visit towns across America to conduct town meetings
to find out what Americans really want, what is truly important
to them. Our representatives can then develop realistic budgets
to govern and manage economic development with consensus,
a mandate from the people, encouraging positive contingent
behavior while remaining cognizant of all unintended consequences
with tax relief. Simply put, economics starts with individuals
making choices based on self-interest and how these interests
affect society as a whole.
What must be determined is, "will a tax cut lead to
a harmonious result or a chaotic one?" In 1776, Adam
Smith, often called, "the father of economics," published
a book entitled "The Wealth of Nations." While is it clear
that he was unfamiliar with the model of supply-side economics,
a model that, in the 21st Century, is argued by some to be
obsolete, he discussed unintended consequences: "Every individual
is continually exerting himself to find out the most advantageous
employment of whatever capital he can command. It is his own
advantage, indeed, and not that of the society, which he has
That "view" is selfishness. Further, economists, including
Alan Greenspan, never use controlled experiments to gather
facts to test economic theories, despite what many might think.
There are far too many variables that influence the economy
which makes any statistical analysis misleading under the
best conditions: If a system of many interdependent markets
is in disequilibrium, will it return to an equilibrium? If
it does return to an equilibrium, what factors determine the
speed of adjustment? Can there be more than one equilibrium
in such systems? Does it matter for the adjustment process
if markets are not competitive? Can an equilibrium for the
system exist if some markets do not clear, that is, can some
markets have surpluses or shortages when the system as a whole
is in equilibrium? Finally, what sorts of forces cause disequilibrium
in the first place?
With all of these variables, economists operate on gut. They
are charged with the responsibility of reacting to market
conditions which include these variables with the goal of
improving consumer confidence, by making necessary adjustments.
The Federal Reserve Chairman cannot solve all of our problems,
especially if we create new ones. Bush's tax proposal may
be reduced to the following argument that economists have
been bantering about for centuries: "Good results to not necessarily
come from good intentions and good intentions do not necessarily
lead to good results."
While the President's tax relief package may be well intended,
there is absolutely no science to his theory that "giving
Americans a refund," will do anything for our economy. There
are far too many questions and far too many risks to established
programs in the President's budget proposal its present form.
All Americans must have assurance that promised programs will
be fulfilled and insurance that existing investment programs
will not be cut, jeopardizing our economy.
What is science is that the current market conditions do
not agree with the President's short-term assumptions, let
alone ten years out. Bush's calculations do not add up. If
his theory does not fit the facts, one can easily conclude
that the Bush theory for positive economic development, returning
money to taxpayers, forcing them to speculate with respect
to their own financial futures, is wrong. President Bush has
an obligation to all Americans to tell the whole truth which
must includes how he is going to pay for all of his promised
federal programs and still provide tax relief.
Until then, we must say no to tax cuts.