Another Goofy Idea

President Obama just came up with an idea on his weekly radio address that would allow people to put a check in a box on their Internal Revenue Service tax return to receive a Series I Savings Bond instead of a payment or check. Ahh...where to begin?

First, anyone who wants to buy a government savings bond can certainly do so now without the IRS's assistance. All this program does is allow the government to borrow extra money from citizens every Spring. After all, a government savings bond is just an IOU from the government for money you lent them. They borrow the money from you and give you interest on the loan. So instead of your money, you have a piece of paper. Why would anyone lend money to these guys until they constrain their spending? That is like giving money to a crack addict and expecting a return on your investment.

Second, it is not their money. It is the taxpayer's money. If someone overpays a bit to avoid writing a check at the end of the year, give them their money back. This program says "let me get back to you later with that money".

Third, will this eventually lead to all refunds being processed this way? If so, it will never work. It is easy enough to change your W-4 form to claim 935 deductions to pay less taxes during the year and just write a check on April 14th. If anything, the taxpayer will have more money to pay the bill with from the interest accrued during the year. The government will, of course, have less. The end result will be that the money the government gets to use now from people overpaying during the year will go away and the net result will be less money to the government, not more.

In one week, the President said we have to spend more and that we have to save more. Which is it?

This is a dumb idea.