PRESIDENT GEORGE W. BUSH Message Board

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Politics : PRESIDENT GEORGE W. BUSH

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To: Kenneth E. Phillipps who wrote (711005)	11/3/2005 8:41:50 PM
From: CalculatedRisk	Read Replies (1) of 769670

Another economic myth is that Bush's tax shifts stimulated the economy. Not true. First, I say another myth, because SS has a minor impact on future liabilities. See: Message 21854692 The basic rule on "tax cuts" is that they are usually stimulative if matched by spending cuts. Since there were no matching spending cuts, the Bush "tax cuts" are referred to as "tax shifts" - they shift the liability from current taxpayers to future taxpayers. According to Dr. Barro's research (one of the most respected conservative economists), tax shifts are at best neutral. Personally I think the Bush tax shifts had a negative impact on the economy! The reason the economy recovered was due to the emergency interest rates over the last 4+ years (the longest period of negative real rates in US history). We are now paying for that aggresive monetary policy with higher inflation and imbalanced asset prices. As monetary policy goes neutral (it will take a few more hikes), we need better fiscal and public policy. Unfortunately I don't see any move to correct the errors of the last 4+ years.

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