21 JAN 08 / "Economic Window Dressing"

President Bush and Congress are quickly working toward an agreement on an economic stimulus package to help prevent a recession. The package will include tax rebates for individuals, but they are unlikely to have much economic impact. A better long term solution would be to make the Bush tax cuts permanent, abolish the Death Tax, and cut the corporate rate from 35 percent to 25 percent.

There is a chance that the United States is already in a recession in this fiscal quarter. And by the time we realize in April, we'll already be halfway out. Like a medical doctor, the caveat for politicians in Washington, DC for the economy should be to "first, do no harm." Our national debt is a significant contributor to the devaluation of our currency. The American economy, however, can help us grow our way out of this problem. A growing economy will increase tax revenues and help eliminate the deficit and pay down the national debt.

Tax breaks are always welcome for individuals and corporations, but anything else is too intrusive. Tax breaks and increased funding for food stamps should not be coupled with increased spending. Such spending is artificial, ill conceived, and self-defeating.

The American economy has endured the stressors of high energy prices, a falling housing market, and a weak dollar for years. The chickens are finally coming home to roost, however.

The American people need to prepare themselves for 12 to 18 months of a stagnant (at worst) or slowing economy.

Inflation rose at 4.1 percent last year, the highest rate in 17 years. And wages are not keeping pace. It is no wonder that consumer spending during the Christmas shopping season was the worst in 5 years. As the American consumer grows more cautious, the economy will undoubtedly suffer.

It is likely the entire world will follow the United States into recession.

The president and Congress are right to try to prevent a recession, but the forces of a market economy as large as ours are sometimes as uncontrollable as the forces of nature. When markets correct, we must adapt to them as best we can.