An Economic Stimulus for Whose Country?

We know it is an election year when the U.S. Congress votes to send us all a check. Several weeks ago the Congress approved and President Bush signed legislation granting $150 billion in tax rebates with the stated intention of stimulating the U. S. economy. According to the Internal Revenue Service, “starting in May, the Treasury will begin sending economic stimulus payments to more than 130 million individuals. The stimulus payments will go out through the late spring and summer.”

Much as we all appreciate the unexpected rebate of even a small portion of our federal taxes, past experience indicates that were our national leaders truly interested in the long-term health of our economy, rather than pleasing taxpayers in an election year, they would sharply cut taxes and make it more profitable to work, save, and invest.

As one presidential candidate asked, whose economy are we stimulating when the U.S. government borrows $150 billion from China to give $600 to each taxpayer so that they can purchase goods made in China?

A recent paper published by The Heritage Foundation states that “tax rebates fail, because they do not encourage productivity or wealth creation. To receive a rebate, nobody has to work, save, invest, or create new wealth.” It also pointed out that “every dollar that government rebates ‘inject’ into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another.”

This is not mere speculation on the part of The Heritage Foundation; it points out that the “quick fix” of random tax rebates has been tried before, in 2001, and “had little economic impact.” On the other hand, the tax rate cuts of 2003 were effective because they “were designed to increase market incentives to work, save, and invest, thus creating jobs and increasing economic growth.”

It should not be surprising that those countries that suffered most severely from the deadening hand of socialism are today experiencing vibrant growth through flat and low taxes. In fact, every flat-tax country, except Hong Kong, is a former Communist nation. In Eastern European countries like Slovakia, rich and poor alike pay a 19 percent tax on their incomes, and their economies are growing faster than the rich Western European countries, where many companies now are considering moves to the East.

What is most extraordinary is that while many in the U. S. Congress continue to focus on class envy and socialist redistribution schemes, the country that suffered most from the Marxist nightmare has implemented a 13 percent flat tax rate, four percentage points lower than the most ardent flat tax supporters in our country have requested. Since adopting the flat tax, Russia’s economy has grown by 10 percent, which exceeds growth in the United States and Western Europe during the same period. Hong Kong has had a flat tax for over 50 years and is the world’s fastest growing economy. There are even signs that China may follow Hong Kong’s example.

The recent rebate approved by Congress brings to mind a quotation often cited by President Reagan:

"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship."

In our land of freedom, free enterprise, and opportunity, we should relearn the principles that made our nation the great arsenal of democracy, the principles that those so recently enslaved by socialism have learned through their bitter trials. Low taxes succeed because they reward work, encourage savings, and provide the investments that lead to new jobs and economic growth. The cynical quick fix, given in an election year, may help pay a few bills, but in the long run it only deepens our national debt and does little to improve America’s economy.

To Fix Our Schools, Let’s First Fix Our Testing System

It often seems that one of the reasons South Carolina ranks last among the states in student achievement, as measured by SAT scores and the state graduation rate, is because our education officials are so preoccupied with matters that relate only marginally to the academic success of students in the classroom.

Under an accountability plan that our state education leaders negotiated with the federal government, in return for federal funds under The No Child Left Behind Act of 2001, not a single school district in South Carolina met federal yearly progress targets last school year. Furthermore, only 37 percent of schools in the state made “adequate yearly progress” toward the agreed-upon goal that all students will score proficient or higher in English, math and science by 2014. Even more disturbing, state education leaders have said that these numbers will only get worse.

Instead of devoting our full attention and all of our resources toward ensuring that every student achieves at his or her maximum ability, our state holds the “distinction” of being the only state in the nation to own and operate its own school bus fleet. Ours is also one of the few states in the nation that administers its own testing system that we’ve named the Palmetto Achievement Challenge Test (PACT). This test diverts vast resources and attention from what should be the focus of our educational establishment, and by any standard it fails to provide timely and useful diagnostic information that would actually allow teachers to better understand and address student performance.

Most states purchase commercially available achievement tests from companies with the professional and scientific expertise to administer tests customized to individual state standards. Unlike those national achievement tests that provide diagnostic information about individual students within a few days, our PACT results are only available long after students have moved on to another grade. Also, the PACT does not provide diagnostic information about individual students, nor does it allow us to compare our students’ achievement with their regional and national peers.

In recent years we have spent approximately $65 per-student administering the PACT, while most states obtain far more useful information for under $10 per-student. In addition to many hidden costs of administering the PACT, such as field-testing possible questions, our state spends over a half million dollars on salaries tied to the test, while districts are forced to additionally spend tens of millions of dollars to purchase the national diagnostic tests in order to obtain useful information about individual students.

Many dedicated teachers complain about the time lost in preparing for and administering tests. It is particularly unfortunate to waste valuable time preparing for and administering a test that does nothing to help us understand and address the education crisis in our state. It often seems that many of our state’s education leaders are more focused on hyping the results and masking the failures of the status quo than serving the teachers, families, and students in our state.

Before the crisis can be addressed and our education problems fixed, we need to implement a testing system better than the PACT that will allow us to diagnose the problems, great as they may be, and ensure that every child is receiving all the help he or she needs to realize his or her God-given potential.

To do justice to our students and their teachers and to focus our efforts where those efforts are needed, it’s time we turn over school bus operations to those who understand the transport business -- and its time we turn our student achievement testing over to those national companies that are expert in the field.