Three
pitches, commentaries and/or analysis of what can be expected from Bush
tomorrow. Should the headline be
More Regurgitated Reaganomics?
Same old, same old? Give
Trickle Down a Chance? If only
they could bring Jack Kemp and Newt out of hiding, but it’d be too obvious. -
KWC
Analysis
Finds Little Gain in Tax-Cut Plan
2 Economists Assess Dividend Proposal
By
John M. Berry, Washington Post Staff Writer, Monday, January 6,
2003
Eliminating
taxes on dividends paid to individuals, the centerpiece of President Bush's
stimulus package, would do little to spur economic growth or reduce the
nation's jobless rate, according to an analysis this weekend by two prominent
economists. Bush is to provide
details of his plan in a speech tomorrow.
Allen
Sinai of Decision Economics
and Andrew
F. Brimmer,
a former Federal
Reserve Board member
who heads a consulting firm, said that even a much broader combination of
additional spending measures and tax cuts worth nearly $500 billion over the
next five years would raise growth by only about a half-percentage point and
reduce the unemployment rate by only one-tenth or two-tenths of a percentage
point this year and next.
The
impact of a stimulus package much larger than the one the administration is
expected to propose is so small, Sinai told a panel session at the annual
meeting of the American
Economics Association
here, because "the
economy is so large" relative to the amount of stimulus.
http://www.washingtonpost.com/wp-dyn/articles/A14740-2003Jan5.html
The perils of short-term tax cuts
By Gene Sperling in The Financial Times of
London, Published: January 5 2003 22:08
Although
John
Maynard Keynes
dubbed the "long term" as the time when we are all dead, it is the precisely
the time-frame on which countries should focus when pursuing policies of
fiscal discipline. Unfortunately, honest debate about rising deficits and
fiscal discipline in the US is being hampered by those who consistently blur
the distinction between the short term and the long
term.
There are three critical distortions in the
case now being made by Republicans for further tax cuts. First, the case for a
short-term stimulus is being used as a rationale for giving up on long-term
fiscal sanity. Basic Keynesian economic
theory dictates that, in a slow
economy, it makes sense to use temporary tax cuts or spending increases to
boost spending. So when policymakers say we should not worry about a temporary
rise in the deficit in a time of economic weakness or war they are right. But
the crucial words are "temporary" and
"time of economic weakness or
war".
http://news.ft.com/servlet/ContentServer?pagename=FT.com/StoryFT/FullStory&c=StoryFT&cid=1039524179720&p=1012571727092
WP
Editorial: The Tax Cut Trap
Monday,
January 6, 2003 @
http://www.washingtonpost.com/wp-dyn/articles/A15014-2003Jan5.html
LET'S
SEE IF we have this right. President Bush plans to propose a stimulus plan the
centerpiece of which will have little or no stimulative effect. At a time when some people badly could
use help, Mr. Bush's tax cut mostly will help those who need it least. And while the president is warning
Congress to restrain its spending on basics such as education and aid to the
poor, the tax cuts will further inflate his growing budget deficit. No wonder that Mr. Bush, even before
officially unveiling the plan tomorrow, waved his magic "class warfare"
amulet, seeking to obscure the obvious -- another tax cut for the rich -- by
preemptively accusing his accusers.
Outgoing mail scanned by NAV
2002
