The purpose of the proposal is to put more money in the hands of individuals so they will consume more, thus stimulating the economy. Other politicians have proposed similar measures differing only on dollar amounts and who will receive the rebates. However, all agree that it is critical that something be done quickly to forestall the predicted economic recession.

Apparently, the timing is problematic as the IRS is not efficient enough at sending out tax rebate checks, thus it will be months before any of us receive our windfall.

Fortunately, I have a solution that will not only accomplish everything that President Bush’s plan will but also will solve the timing problem. It is very simple – Congress should pass and the president sign a bill that immediately requires all parents of teenagers to increase their weekly allowance to $300 per teenager over each of the next 12 weeks. This increase in allowance will add up to approximately $150 billion and will be accomplished before the April 15 tax deadline (when Bush’s proposal would be just beginning to start).

As we all know, teenagers love to consume and are loathe to save anything. Therefore, the stimulation to consumer spending by teenagers will be enormous. I also expect this plan to be incredibly popular with teenagers (and to those businesses that sell to teenagers).

Of course, those of you not schooled in popular economics are probably puzzled at the moment. You may even be asking a silly question like, “Won’t parents have to reduce their consumption by $300 per week thus completely offsetting the consumption by teenagers? And if that happens, then won’t the impact on the economy be a wash?”

I could respond that you simply don’t understand modern economics, or I could be honest with you and admit that you are entirely correct. As I said, my plan will accomplish everything the President’s plan will – absolutely nothing.

The only difference between my plan and the proposed rebate plans is that with my plan it is obvious where the money is coming from. But obvious or not, the money still has to come from somewhere. So when the government sends us a check for $600 that money has to come from somebody.

Assuming the Federal Reserve doesn’t simply print the $600 (which creates a whole different set of problems), that tax rebate must come from at least one of three sources.

One, the government must lower spending (I’ll wait while you finish laughing). If that happens then that is identical with the parent situation described above.

Two, the government increases taxes. This solution is equivalent to your childless neighbor paying for your teenager’s allowance.

Third, the government increases borrowing. The parents in my “allowance program” could do that as well by taking out a loan. But that simply means that someone else reduced their consumption to provide the loan. The same is true for the government – if the government borrows $600 from John to pay Paul’s tax rebate, then the overall impact on consumption is nil.

The only way a tax rebate plan (or my “increased allowance” plan) will truly stimulate the economy is if individuals work more (and thus produce more) to pay for it. However, onetime tax rebate plans are notoriously ineffective at inducing people to work more.

Don’t get me wrong, I’m all for receiving a tax rebate of $600. I’d much rather be spending that money myself than having some bureaucrat spend it. And I fully expect to see a flurry of economic activity in some sectors (just as the allowance program would produce a boom in markets for video games or whatever teenagers spend their money on these days). Therein lies the fallacy of these programs, we see what is spent; we don’t see what is not spent.

Doug Wills is an economics professor at the University of Washington Tacoma. He writes monthly about how current events intersect economics. Reach him at dtwtnt@hotmail.com.