Rebates likely to get us bill of goods

April 04, 2008|By JAY HANCOCK

Yikes, we almost had an adverse economic event there. But we'll soon be wading in dough, thanks to the grown-ups in Washington and Annapolis.

We knew we were getting a rebate from the Internal Revenue Service. Now we're getting one on our Baltimore Gas and Electric bills, too. Memorial Day sales, here we come!

Who'd have thought that Martin O'Malley and George W. Bush would team up to end the recession?

The poet Juvenal wrote cynically that "bread and circuses" were all the Roman government needed to keep the populace under control.

But those circuses were pretty cool! The iPod my BGE rebate will buy can't compare to chariot races and lion-bait Christians, but it might keep me chipper until the election. Especially if the new Madonna album comes out.

A typical BGE household gets $170 off its monthly bill. The IRS rebate comes to between $300 and $600 for most taxpayers and another $300 for most dependents.

We're expecting $1,500 in the Hancock bungalow. There won't be a quintuple-burner, stainless-steel, gas-fired grill within five counties that's safe when that baby lands in the mailbox.

The great thing is that government is learning it should do this regularly.

When the economy hit a little problem in 2001, Congress and Bush arranged for billions in IRS rebates and notified taxpayers in a letter "written in the congratulatory tone of a college acceptance letter or a telegram to a sweepstakes winner," The New York Times reported. "Dressed as Tooth Fairy, IRS Will Drop a Note to Millions," was the headline.

Two years ago, Maryland policymakers pushed for the deferral of a big BGE price increase. Then you could defer the deferral if you wanted to.

Ancient Romans had to riot now and then and slaughtered an emperor or two to maintain government emoluments. Americans merely need to threaten a shopping strike.

Fortunately, when the Bush administration launches a pre-emptive attack, it knows exactly what it is doing.

For many families, the IRS money will cover last November's mortgage payment. Of course, they still owe for December through March, and they won't spend it on the mortgage anyway. But it is Washington's empathy that counts.

For others, the IRS check will finance badly needed retirement savings or a reduction in huge credit-card balances. No, wait - people probably won't use the money for that.

At least the Federal Reserve is cutting interest rates so low that affordable loans will soon be available for everybody. Right?

Wrong again, subprime breath. The rates that really matter - for mortgages and credit cards - haven't fallen that much. Banks are reducing lending, anyway. The main effect of low rates is to hurt people on fixed incomes by shrinking bond and certificate-of-deposit yields.

And to stoke inflation. Have you noticed inflation? Gas is $3.20 a gallon. Bread is $3.50. The Romans would have torn down government buildings over that.

Here in Maryland, the BGE rebate will cover maybe half of July's bill. After that, electricity prices figure to stay high for years because nobody is building new-generation plants.

State sales and income taxes are high and rising while incomes tread water.

Plus, low interest rates and perpetual federal deficits - just made worse by the tax rebate! - have brought the dollar to historic lows against world currencies. That makes all Americans poorer.

Best Buy? Cancel the iPod. Home Depot? Put my grill on layaway. Maybe we haven't ducked a recession after all.

The Romans were smart. A good motto, whether you're buying a house, a used car or government propaganda, is caveat emptor.

jay.hancock@baltsun.com

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