IRS Rebate Checks

In an op-ed for The New York Times, Bruce Bartlett provides an interesting commentary on the proposed $117 tax rebate that the federal government is sending to all taxpayers. The tax rebate is supposed to stimulate the economy by boosting consumer spending. I do agree with his main argument that the $117 billion rebate is not going to solve the woes of the financial markets. Its frankly like throwing water at the neighbors place when your house is on fire. The current financial crisis is due to housing market gone bad which has resulted in decrease in consumer spending. The tax rebate is just treating the symptom but leaving the underlying disease untouched and intact.
What really is necessary as suggested by Bruce is some kind of a "Mortgage Superfund" which will be used to cleanse the financial system of atleast some if not all of the bad mortgages. Of course the problem with this approach is that the taxpayer will have to foot the bill for all the lousy decisions made by highly paid Wall Streets pros and misinformed home buyers.
But in the larger interest of the economy, we taxpayers may have to swallow this bitter pill, whether it be in the form of a tax rebate or in the form of a "Mortgage Superfund". So why not ensure that this bitter pill addresses the problem and not create new ones down the road.

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