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To: Thomas M. who wrote (3578)	8/21/1999 9:58:00 PM
From: WTMHouston	Read Replies (1) \| Respond to of 17683

OFF TOPIC Which, in my view, is precisely why Washington should use the vast majority of any surplus to reduce debt rather than fund a tax cut. Reducing debt will force that money, investment money, to find someplace else to be productive, i.e., the stock market. A tax cut will be far less efficient and, instead, will place the money in a pipeline far more likely to result in spending rather than investing. Sure, the spending will end up on someone's bottom line, a short term event, but it will do nothing to address the overall problem from too much debt. The current expected surpluses are the long term and final fulfillment of Reagan era tax cuts. They should be used to offset and pay for their financing source. Indeed, paying down the debt is the most efficient way to ultimately assure lower tax rates. Besides, some day Washington will start deficit spending again: it is simply a political reality. All of that said, I agree completely that there is little, if any, justification for a Fed rate hike. However, lately, AG seems much more willing to act by reacting to expectations. The rate cuts last year were, in part, responsive to expectations. The likely hike next week has already been fully priced into the market: that is, it is expected. The expectation makes it much easier for AG to do it. It has not, however, been priced into the economy, which is where it will ultimately hurt. Troy