----- Original Message ----- From: "John D. Giorgis" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[EMAIL PROTECTED]> Sent: Saturday, October 02, 2004 9:33 AM Subject: Re: Productivity Re: Br!n: some thoughts and quotes.
> We also suffered far less of the usual pain associated with recessions this > time around, again despite the bursting of an asset bubble. Just compare > the relative economic pain of the previous two recessions to this one. I find it quite curious that you credit Bush's policies with the shortness and mildness of the 2001 recession (Q2 & Q3). This was fairly early in his term..the recession (by common measure) was over in Q4 of 2001, which was less than a year into his presidency. Over many posts you have argued that one cannot use the performance of the ecconomy during Democratic and Republican terms as an indicator of the results of different ecconomic policies. Part of this was the long time constants associated with fiscal policy. I realize that many ecconomists agree that monitary policies are best in adressing recessions/inflation, because they are faster acting: over the 3-6 month time frame. I've seen arguements that the fiscal policies produce results in the 6-24 month time frame from when they take place. So, tax cuts in Q3 '01 will have an impact from Q1 of '02 to Q3 of '03. If the cuts are repealed in Q3 of '03, the effects of the tax cuts will phase out from Q1 of '04 to Q2 of 05. Given this assumption, Bush's tax cuts should have had no effect on the recession of '01. The only fiscal policy that would have an effect is Clinton's. His budget surpluses gave Greenspan the room he needed to cut the interest rate as much as he did. But, I'd be happy to give Bush some benefit of the doubt and agree that the tax rebate checks did have an impact. Rebate checks are a good way to speed up impact...compared with cutting next year's taxes. I've read arguments by reasonable people that argue that the rebate checks were fast enough to have an impact on the recession. I would argue that Greenspan deserves the most credit for the brevity of the recession, with Clinton and Bush sharing the remaining credit. But, I would argue that the tax cuts planned for 2005 do not have a noticeable impact on the 2001 recession. Indeed, many of the tax cuts focused on the higher income earners were back loaded, and only gradually took effect. To first order, these had nothing to do with the length or severity of the 2001 recession. In addition, if we agree that Bush's fiscal policy were having an impact within 9 months of his taking office, then we need to agree that, as his administration continued in office, his influence grew. Thus, his fiscal policies have more impact in 2002 than 2001, more in 2003 than 2002, etc. Out of curiosity, John, what is your opinion on the time constant associated with fiscal policies. Sometimes you seem to argue that its >4 years, other times <1 year. This may very well be my not understanding exactly what you mean, so clarification would be helpful. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
