To: Les H who wrote (20949 ) 7/23/1999 1:48:00 PM From: Casaubon Read Replies (2) | Respond to
while it may be true that AG is concerned about inflation, I found it more than likely he is just using this as an excuse to reign in "the bubble". Why do I say this? Well, the New York times, in an article called, 'Gimmick' Eased Passage of Tax Bill, the Republicans in an effort to pass a 10% rolling tax break (cumaltive 1% annually), included a stop gap measure where no tax refund would occur in years in which the budget surplus did not result in a lower national debt than the prior year. The curb was then replaced with one that was based lower interest payments than the previous year. Now, there are two ways to produce lower interest payments: decreasing the debt and decreasing the interest rate. According to the article, the Congresional Budget Office is forecasting lower interest rates. This would virtually guarantee the tax reductions to go into effect. Either the Republicans believe that interest rates will indeed decline and trigger tax reductions without necessarily adressing the defecit, or they are not negotiating in good faith for thier constituents. Because, if they get the bill passed and rates rise, there is virtually no possibilty of expecting higher tax revenues to cause the tax reductions to kick in, in the face of a more restrictive monetary policy. My conclusion, is they probably do expect the interest rate to decline. Any comments?
