<<The problem with the economy is not the consumer (yet) it is capex and investment.>>
My opinion--the problem (at least one primary problem) is that there is worldwide overcapacity. It is this that is leading the way to disinflation and perhaps eventually to actual deflation. If you are concerned about cap ex, then you should be against dividend tax cuts--it will encourage companies to return money to investors instead of keeping it to be available for cap ex if growth actually returns, and investment becomes more attractive.
Buffet last night maintained the way this tax cut is structured won't lead to any greater investment than is already being done, it will just become different kinds of investment, or money in the bank just waiting for things to turn. As it is, he said, there is plenty of money to invest, the problem is more in finding promising areas to invest it in. That is why he is looking internationally, not just the US.
When Bush first announced this dividend tax cut, it wasn't sold as a "job creation" cut, it was sold as alleviating an intrinsically "unfair" tax, a "double tax." It was changed to a "job creation" cut for political reasons. You don't have to be a "democrat" wishing for the economy to fail to be against this cut, or Bush's other cuts. In fact, IMHO, if you want the economy to continue down, pass the cut. It won't do anything to help the economy. In any case, Bush has plenty of "reasons" to fall back on in the next election for why the economy is failing, and none of them will be "his" fault. It will all be the fault of the Clinton and the democrats, bin laden and gang, and the market bubble bursting. He will simply say that his program wasn't passed, he needs more Republicans with sense in Congress to get his real plan passed, then all will be OK. |
