BUYING MORE WOE? TAXPAYERS ARE JUST NOT IN A SPENDING MODE.

Byline: Kimit Muston Local View

I walked into a crisis recently at the Sherman Oaks Fashion Square mall.

While young Brenner dozed peacefully in his seat in the double stroller, his mother, Alicia, watched anxiously while husband Jeff tried to corral Ethan, their eldest son, to make a last-minute repair to the boy's sandal.

The young couple barely acknowledged the interruption when asked what their plans were for their federal tax rebate. Alicia explained they hadn't given it much thought and Jeff, still chasing Ethan, said he had no idea what they were going to spend the extra money on.

But what Jeff and Alicia and 100 million of their fellow American taxpayers do with their federal rebate checks represents a breathtaking economic gamble on the part of the Bush administration.

Fears are that with the U.S. economy growing at only around 1 percent for the last two quarters while the operating capacity of America's factories is down to 77 percent, the lowest it's been since August 1983, should this young couple from Agoura Hills not make the expected choice and spend their share of the $55 billion the Internal Revenue Service is mailing out between now and Sept. 28, the United States may drop into a recession and drag a weakened Asia and Europe along for the ride.

If you paid taxes in the year 2000 and made more than $46,000, then you are also a player in this gamble. You will receive a rebate of 5 percent of your taxable income, up to $12,000. The checks will be worth $300 for an individual, $500 for a single parent and will top out at $600 for a couple who filed jointly.

The first 11 million checks go into the mail Monday morning.

The Bush administration, which touts these rebates as the first step in a 10-year, $1.3 trillion tax cut, is counting on taxpayers to use the money to buy new things: refrigerators, dishwashers, electronics, clothing or vacations.

The idea is that consumers, who have kept the economy afloat for the last year, will be the saviors yet again.

But if an unscientific poll taken in a Glendale and a Sherman Oaks shopping mall is any indication, the main players in this gamble are nervous. None would allow their full names to be quoted in any discussion of money and few would admit to having given much thought to the rebate, a seeming reversal of the celebration of the Wall Street paper profits of the last nine years.

In both malls there were already 10-percent and 20-percent-off signs in many of the shops. The back-to-school sales haven't started yet and young Ethan and his sleepy brother are each going to need a new pair of sandals soon, rebates or no rebates.

But what are the odds taxpayers will use their new-found cash to get the economy growing again?

Perhaps the calmest folks I talked to were Alice and Tony, a middle-age couple seated on a bench in front of J.C. Penney in Glendale Galleria.

Asked what they intended to do with their $600 check when it arrived, they both smiled serenely. Alice said she already had everything she ever wanted and it was her intention to give the money to the Los Angeles and Fred Jordan missions downtown. Tony nodded in agreement.

Just a few yards away, Mary from Van Nuys, who operates a small jewelry shop, shook her head in response to the question and looked worried. She is going to use her money, she explained, to pay bills.

And nearby in the Music Box, manager Natyia concurred. ``Pay bills, I guess,'' she told me with a shrug.

In Sherman Oaks Fashion Square, Ida from Encino was registering new voters for the Republican Party. Although she didn't seem to be doing much business, she proudly informed me more people were asking if they could volunteer this year. When she gets her rebate, she said, she will ``spend it right away. Pay for some home repairs. And maybe take a little vacation.''

At the other end of the mall, 81-year-old Louis from Sun City was resting on a bench while his wife shopped. He showed me his new plastic knee and said his rebate was going to be used to pay past debts. ``Well,'' he said, ``that sounds bad. Just say bills.''

Natasha from Sherman Oaks reported she had no plans for the money and hadn't thought at all about the rebate. When asked to think about it she said she would probably put it in the bank.

Damon from North Hollywood was more certain. ``I'll save it,'' he said proudly. ``Put it in the bank.''

Jennifer, the manager at Things Remembered, said that as far she knew her company had no plans to take advantage of shoppers' tax refunds.

John, the manager of Structure, a men's clothing store, told me the same thing and added that because the rebates mailings going to be stretched out until the end of September he didn't think they would increase store sales.

Meanwhile at The Discovery Store, brand new manager Hida explained she had only been in the job for a week. ``They may have plans,'' she said of her corporate bosses, ``but I told them I just wasn't ready to deal with it right now. Things are too hectic. Maybe next week.''

Washington and Wall Street won't know until October if we are in a recession in July. It is possible the retail chain stores are wrong. It is possible consumers will use their rebates to spend the economy back to prosperity. And it is possible the Bush administration has figured the odds right and will win this gamble.

But based upon what I saw and heard at the malls, I think we are already in a recession. Taxpayers are going to use their rebates to pay down personal debts because that is the sensible thing to do when money is tight.

I think the Bush administration thought out this tax cut and the rebates as thoroughly as they did their policy on global warming, energy and missile defense.

If I am right, when unemployment, crime and all the other flotsam from a floundering economic ship comes roaring in with the tide, the Bush economic plan will have cut government's ability to deal with it by 15 percent. The national debt, left unpaid to pay for the rebates, will eat into future tax revenues and drive up future interest rates, delaying a recovery even more.

And that is how you turn a recession into a crisis.

CAPTION(S):

drawing

Drawing:

(color) no caption (Uncle Sam, money)

Jorge Irribarren/Staff Artist