Rebate, schmebate

MANIFESTO

I see that the Harvard MBA is talking up tax rebates again. As he sees them, they'll "help give our economy a shot in the arm."

Apparently, the fundamental purpose of the rebates is to goose consumer spending, which accounts for two-thirds of the nation's economy. Currently, consumer spending is flat, but those in the know are hopeful that

"the real telling part of consumer spending will come in May and June."

That's when Americans receive their tax refunds and tax rebate checks that are part of the government's $168 billion stimulus package. The effect of the Fed's interest rate cuts, which act with a lag of about six months to a year, will also start to kick in.

I'm really of two minds on this. I suppose it'll be good that people will have more to spend, but I've heard for the past number of years that Americans don't save enough. If this is the case, won't the additional spending that the Bushies anticipate be counterproductive? I don't know the answer to the question; I raise it so that those with more economic acumen than I can respond.

Nevertheless, the former major stockholder of Harken Energy continues to believe that tax rebates and more tax cuts will help the struggling economy even though such strategies have already been shown to bring about the problems the nation is encountering today.

And, as is his wont, Gorgeous George is going to use the current problem to create even more by

proposing a sweeping overhaul of the nation's financial regulatory system, combining what is now an alphabet soup of government agencies into three streamlined regulators.

The proposal is the result of a year of study by Treasury Secretary Henry M. Paulson Jr. and has the support of the president, according to Treasury officials who spoke on condition of anonymity Friday.

Under the administration's plan, which will be released in detail Monday, the Federal Reserve would get expanded power to promote stability in financial markets.

The Securities and Exchange Commission and a handful of other federal agencies -- all formed in the Great Depression or earlier -- would be restructured and have their responsibilities redefined.

Oversight of the mortgage industry would be stepped up, and states could lose some of their authority to regulate banks.

Stuff like this really beggars belief. The very entity—the FOMC—that unleashed the hounds to get this housing/mortgage fiasco started is now being called upon to ensure that such a debacle doesn't occur again. Bernanke has already shown that he has no idea how to oversee a situation such as we're in. To make him the guard dog for future problems is ludicrous—but all too typical. Concurrently, the SEC, which in better times has actually shown it can protect small investors is to be merged with the Commodity Futures Trading Commission! Unbelievable.

Call me naive, but I can't believe the legislature will let these idiotic ideas go anywhere.

UPDATE — The New York Times reacts to the plan here.