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Politics : Impeach George W. Bush -- Ignore unavailable to you. Want to Upgrade?

To: Mephisto who wrote (1871)	2/23/2001 7:42:47 AM
From: RockyBalboa	Read Replies (1) \| Respond to of 93284

Former Treasury Secretary: Defer Tax Cut By David Bailey CHICAGO (Reuters) - Former U.S. Treasury Secretary Robert Rubin said on Thursday that President George W. Bush's $1.6 trillion tax cut package should be deferred until ``highly unreliable'' budget surplus projections can be better gauged. Rubin, who was revered on Wall Street during his tenure, painted an uncertain picture of the future for the economy. Maintaining fiscal discipline, a key to the U.S. economic expansion the past eight years, should be the first priority to keep from blundering down an economic path with a real chance of leading back to federal budget deficits, Rubin said in a speech to the Economic Club of Chicago late on Thursday. Five-year projections, to say nothing of 10-year projections, are highly unreliable, Rubin added, noting that Clinton Administration projections far underestimated the speed with which budget deficits could be eliminated. ``The judgement can be deferred with respect of what to do with this surplus, including the question of a very large tax cut, rather than commit now, on the basis of five- and 10-year projections, to a path with a very real possibility of returning us to the kinds of deficits that were associated with the economic difficulties of the early 1990s,'' Rubin said. Rubin served as Treasury Secretary from 1995 to 1999 and is now chairman of the executive committee for financial services giant Citigroup Inc.. In response to questions posed by the Economic Club chairman, Rubin said he would not have advised President Clinton to pardon fugitive billionaire Marc Rich, but believed it to be an honest mistake. ``I think it was a mistake to do it, but I think I know this man very well,'' Rubin said. ``I don't think there was something untoward in the reason he did it, I just think it was unwise.'' Rubin also said the euro zone single currency has been a success that will face tests at times due to varying economic conditions throughout the member countries. Britain will likely eventually join the European monetary union, but probably later rather than sooner because of the strong feelings on both sides of the issue, Rubin added. In an opinion piece published in the New York Times earlier this month, Rubin branded Bush's tax cut package ``a serious error'' that risked a slide back into deficits. On Feb. 13, Democratic lawmakers confronted Alan Greenspan with Rubin's words when the Federal Reserve Chairman delivered his monetary policy testimony before the Senate Banking Committee. Greenspan in January declared his support for the idea of tapping surpluses for tax reduction. U.S. House Speaker Dennis Hastert set a July 4 target date to enact the tax cut proposals, saying on Thursday that fast action was needed to boost the faltering economy. However, Rubin pointed out that virtually all mainstream economists say tax cuts this year would offer relatively limited short-term stimulus during the period that is expected to be most difficult. Short-term stimulus could be accomplished by a moderate, front-end loaded tax cut, he said. The projected surplus over 10 years would be closer to $1.5 trillion to $2 trillion after stripping out Social Security surpluses, Medicare surpluses as well as reasonable judgements about defense and non-defense discretionary expenditures and about renewal of various expiring tax benefits, Rubin said. The tax cut would actually cost $2 trillion when including interest on the debt that would not be retired, he added. Rubin said the U.S. economy is well-positioned for the long run, but faces ``real risks and real challenges'' as the country undergoes an unwinding of natural economic imbalances created during the long expansion. The U.S. current account deficit now exceeds 4 percent of the economy, personal savings rates are near zero and corporate and consumer debt as a percentage of the economy are at about the highest levels in 25 years, Rubin said. Most private sector and public sector forecasters see the first two quarters of 2001 as difficult, followed by a rebound over the second two quarters, Rubin said. ``My view is that that may be the most likely scenario, but, considering how all of the positive factors reinforced each other during the sustained good times of the past eight years, there is at least a reasonable chance that the excesses could set off the contrary process leading to deeper and longer difficulties,'' Rubin said. He added that a slowdown elsewhere in the world could worsen the situation, with Europe likely to slow, Japan facing ``very significant'' problems and emerging markets that are dependent on exports to the United States and Japan facing risks as well. biz.yahoo.com