To: Scumbria who wrote (132148 ) 2/9/2001 1:50:16 PM From: tejek Read Replies (1) | Respond to Scumbria and thread, the ugly truth about Bush's tax cut is out......at least according to this guy! America's CEO George W. Bush isn't doing what he needs to do for Cisco's (CSCO:Nasdaq - news - boards) CEO John Chambers. And the market's getting worried about it. Here's what I mean: In Cisco's earnings conference call Tuesday night, Chambers didn't offer much visibility. Even the squishy-soft forecasts he was able to offer were premised on all sorts of maybes and what-ifs entirely out of his control. He said more than once in the call that it was all contingent on continued rate-cutting by the Federal Reserve and on tax-cutting by the president and Congress. But Thursday, it happened all over again because when Bush presented the final version of his tax plan to Congress, it suddenly started to dawn on everybody that Bush's plan is purely Bush league. The lead editorial in The Wall Street Journal got it exactly right and set the tone for the day: People haven't been focused on the fact that Bush's tax plan, as written, won't take full effect until 2009! That's precisely what happened when Reagan's far larger tax cuts were passed into law in 1981, but weren't fully phased in for two years. The phase-in caused businesses and individuals to defer economic activity, and it triggered the deepest slowdown of the past two decades. When the Reagan cuts finally really kicked in, the great boom of the '80s immediately followed. The president himself said Thursday, when he introduced his plan to Congress, "A warning light is flashing on the dashboard of our economy ... We need tax relief now. In fact, we need tax relief yesterday." Big cuts in marginal rates and a cut in cap gains are exactly what growth-sensitive companies like Cisco desperately need in a faltering economy strangled by years of too-high interest rates. But Democrats have already attacked even Bush's modest and deferred tax plan as "fiscally irresponsible." And instead of building bipartisan bridges to get it done -- or more! -- the Republicans are still fighting yesterday's partisan wars with Clinton, trying to embarrass the ex-president over his pardon of Marc Rich. In the meantime, the Fed is doing everything it can to spread fear, uncertainty and doubt about its next rate cut. Chairman Alan Greenspan has hinted that the current crisis is a short-lived "inventory correction," and New York Fed President William McDonough is saying that the economy will be "quite strong" in the second half. Of course, the Fed needs to keep the market guessing. If we knew for sure that rates would be lower in a few months, who would borrow now? The best thing I can say about the market is that it's cheap, and that investors are gagging on their own pessimism. The potential for a bottom is very real. But a bottom isn't the same thing as a bull market. For that you need the prerequisites of growth. And for that, we must look to Washington, like it or not. They got us into this mess, and only they can get us out of it.
