I agree....a tax cut is not what this country needs right now.
____________________________________________________________
A Pox on Your Tax Cut, Mr. Bush!
By James J. Cramer
12/18/00 8:37 AM ET
No no no, Mr. Bush, no. A thousand times, NO. Don't break the covenant between the White House and the Federal Reserve that has brought us so many years of prosperity. Don't put through the tax cuts. It is not the consumer who is causing this downturn, it is the higher short-term rates, something the Fed is about to do something about if you just give it a chance.
For eight years, the Federal Reserve has been at peace with the White House. It has been a joyous and complimentary relationship where first Rubin and then Summers understood that, if the government stopped its reckless borrowing, the Federal Reserve would provide the liquidity necessary to keep this economy functioning at a higher level of productivity and employment than we ever thought possible WITHOUT inflation. The key to this deal was, of course, balancing the Federal budget.
This tax cut of Bush's will put us right back on course to deficit financing,and will make the Fed far less willing to cut rates. My whole bullish thesis for 2001 revolves around the notion that we will get three rate cuts rather fast next year, as the Fed puts us back on a growth track. But if we are just going to stimulate consumer spending at the cost of busting the budget, Greenspan will not play ball. And the bear market will continue.
To me, the choice is a stark one: You either let the Fed loosen the reins and we get a fabulous resumption to the bull market that existed before the Fed tightened. Or you put through an inflationary tax cut that busts the budget and turns Greenspan off to an easing. And the bear market continues as far as the eye can see. As hard as this money-management job has been this year, I have always been grateful that we were never blindsided by the White House with something fiscally incomprehensible that upset the Federal Reserve. With this tax-cut proposal, the game just got much harder, not much easier. |
