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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: Neocon who wrote (39985)	9/27/2000 2:10:38 AM
From: Doughboy	Read Replies (1) \| Respond to of 769667

Your arguments don't fly. It is not a stimulus unless aggregate spending increases out of synch with growth. There is no gasoline on bonfire. The first premise obviously does not lead to your conclusory statement. In fact spending has far outstripped gains in production for at least 18 months now. You're right we haven't red-lined the economy yet, but why do you think Greenspan has been tapping on the brakes for the last year?! Do you have any basis whatsoever for saying that a half a trillion dollar tax cut will not be a "stimulus"? I heard Larry Lindsey (Dubya's economic advisor) speak, and he sort of sheepishly said that he didn't disagree with Greenspan that today a massive tax cut would trigger inflation and defeat price stability, but he said that it was the lesser of two evils since Gore was proposing to spend it all, which was an even greater stimulus. The economists in the audience broke out in open laughter. Face it, there is no fiscal conservative who will stand up for doing that Bush tax cut right now. Additionally, one doesn't know how much private debt will be retired as a result, since people are worried about out of kilter consumer credit. I assume what you're saying is that if you give people a tax cut, you'll get them to pay off their credit cards. That would be true if the people getting the tax cut are the people that have the credit card debt. The fact is that the vast majority of consumer credit is held by the bottom 30% on the income spectrum, the group that pays very little in taxes and therefore stand to benefit little on a dollar basis from a tax cut. The huge tidal wave of money is going to the top 5% of taxpayers who have virtually no consumer credit debt. Finally, if one sets too much aside for deficit reduction, then there is a sudden decrease in the money supply relative to the growth rate, which threatens deflation. That's asinine. The money supply is not tied to the US T-Bill. M1 and M2 are fully in control of the Fed. Anyway, Econ 101 teaches you that deflation is easily solved by printing more money. Further, if there is a sudden reduction in aggregate demand, as would happen if a most of the surplus were set aside, there would be a recession. The safest thing is gradual debt reduction, which is the Bush plan. That is not the Bush Plan. Bush plans to blow most of it (and "it" is purely a projection) on a tax cut. Paul Krugman has written that Bush's tax cut is totally irresponsible given the uncertain nature of the surplus projection. The CBO and OMB projections are middle of the road, i.e., there is huge amount of leeway on either side of the number. There is therefore something like a 20% chance that Bush's tax cut would eat the entire surplus rather than represent just half of it. How conservative is that?!