Retailers Want Bailout, Too

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Add to the list of the hundreds of companies and scores of industries that want part of the Obama bailout money the nation’s largest retailers.

The National Retail Federation has proposed that there be tax-free periods for consumers to hit stores in March, July, and October.

According to a letter from the trade association, "NRF estimates that consumers could save nearly $20 billion. Based on the 112.4 million households in the United States, the figure would amount to almost $175 for the average family."

The proposal makes two assumptions that may not be valid and also undercuts the principle behind the new Obama stimulation plan. The next president is focused on investing as much as $850 billion in building the nation’s infrastructure. That includes new broadband access, schools, roads, and medical technology. Tax rebate programs have never been a significant part of the plan.

The retail association also is dodging the issue of whether part of the problem in its industry is that there are too many stores. This leads to unnatural competition which may cause a level of discounting which hurts strong and weak operations alike. An artificial incentive to bring shoppers to retailers simply lengthens the time that operators which are too poorly financed to be viable stay in business and puts pressure on prices.

The other issue with a tax moratorium is that it limits what taxpayers can do with incentive which the government is giving them to enhance their financial positions. If a citizen wants to use that money to pay off his mortgage, he may be better off. It could keep homes out of foreclosure. It may also allow people who are behind on their credit cards to catch up. Sending people who are already leveraged into stores by offering tax incentives may actually be economically reckless.

The retail industry needs to be weeded out. Incentives to keep open stores which should fail makes a major economic problem worse.

Douglas A. McIntyre