Only traitors live within their means?

["Charles Brown" <CharlesB@xxxxxxxxxxxxxxxxxxxxx>]

Only traitors live within their means?

April 9, 2002


http://www.freep.com/money/business/walsh9_20020409.htm




BY TOM WALSH
FREE PRESS COLUMNIST


Today's front page of the Wall Street Journal, for the first time in its 113-year history, is printed in color.

If even the dowdy gray Journal is tarting itself up in rouge and powder blue, are there any immutable laws left? Any reliable guiding principles?

Not in today's loopy economy. Look at the landscape.

Layoffs are widespread, from Ford Motor to Compuware and Covisint. Bankruptcy filings are surging: Kmart, Hayes Lemmerz, Federal-Mogul.

Yet what do we the public do? We go out and spend. And spend and spend some more.

In the four months from October to January, people in Michigan spent about $1.5 billion that we did not earn. That's about $400 per household. Is this economy a big Ponzi scheme or what?

Less income, more spending
Here's the math behind those numbers, derived from the Michigan Treasury's tax rolls.

>From October through January, sales tax revenues rose $93.5 million, or 4.2 percent, over the previous year. Because Michigan has a 6-percent sales tax, we had to buy more than $1.5 billion worth of stuff to generate the $93.5 million of taxes.

Which would be fine, if we made a bunch more money to pay for all that extra stuff.

But we didn't. In fact, state income tax records show that our paychecks were a tad lighter during that 4-month period. Income tax with-holdings were down 3 percent from a year ago. Part of that dip comes from the phased reduction of state income tax rates, but total taxable income was still down slightly.

Which means the already debt-laden public made no more money but still found ways to spend an extra $100 per month per household.

Whatever became of the old axiom, "A penny saved is a penny earned?" It now borders on treason.

General Motors' "Keep America Rolling" campaign of 0-interest financing was hailed in the wake of Sept. 11 as a spark that kept America's factories humming in a time of crisis. If pumping out free money to keep America spending is patriotism, does that make saving unpatriotic?

Everyone is living it up
To try to get a fix on Michigan's mixed-up economy, state Rep. Nancy Cassis, R-Novi, who chairs the House Tax Policy Committee, is hosting a forum from 8:30 a.m.-1:15 p.m. April 19 at Walsh College's Novi campus. State Treasurer Doug Roberts, along with speakers from General Motors, the University of Michigan and the AFL-CIO will participate. Cost to members of the public is $40; lunch is included. For information, go to www.gophouse.com/cassisroundtable or call 517-373-9024, 9-5 weekdays.

Most economists say the U.S. and Michigan economies are on the mend, even as they caution that the jobless rate may keep rising and that higher energy costs may slow down the revival.

Meanwhile, free-spending consumers keep the show on the road and out of the ditch, even as worrywarts dredge up the old Spanish proverb: "A pig bought on credit is forever grunting." Oink, oink!

As for the Wall Street Journal's new face, I say go for it, sweetheart. Put your red dress on. Live a little. Hell, everyone else is.




Contact TOM WALSH at 313-223-4430 or twalsh@xxxxxxxxxxxxx