A Real Incentive Plan To Boost Consumer Spending
The Democratic incentive plan proposed by President Barack Obama is full of items that will not spark consumer spending. The Republicans refused to vote for the bill and have a plan of their own, which probably will not spur consumer spending very much, but will make its political base happy. What to do? Philip Geier, the President Emeritus of the Interpublic Group of Companies, has an intriguing idea that was first proposed as a full-page advertisement in the New York Times on January 22. It is an idea that we believe might well work to spark the consumer economy just enough to get it moving in the right direction and to stop the spiraling incidence of job loss and business closings. The program would consist of a three-tiered across-the-board tax cut to all consumers based on their income tax brackets. The cut would be in the form of a coupon book of government certificates to be used against the purchase of certain categories of goods and services. The book could be used over a four-month period, although all four monthly coupons could be combined to be used against a large purchase, such as an automobile, clothing, computers, domestic travel, home furnishings, household appliances, restaurant meals, sporting equipment and the like. The certificates could be used to cover a portion or up to half of those goods and services. They could also be used to subsidize up to 20 percent of the cost of supermarket and grocery items. Why would this work? The coupons cannot be used as savings. They must be spent, and consumer spending is the key to short-term economic stimulation. Experts say the plan would immediately stimulate the stock market and would become an incentive for manufacturers and retailers to offer sales to draw consumers. Research, experts say, shows that the great majority of consumers would quickly use their government coupons to purchase goods and services that they have been putting off buying because of fear of the future. If that is so, the plan should provide the economy with the spark it needs.