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Politics : The Donkey's Inn -- Ignore unavailable to you. Want to Upgrade?

To: Mephisto who wrote (1705)	12/29/2001 5:03:19 PM
From: Karen Lawrence	Read Replies (2) \| Respond to of 15516

December 25, 2001 Don't weep over the killing of the stimulus bill: It's "better off dead," says La Jolla supply-side economist Arthur Laffer. I agree with him -- but partly for different reasons. Laffer says that watching the debate over the bill "has been excruciatingly painful -- not unlike passing a gallbladder stone." The economist warns that Republicans and Democrats may try to resurrect a compromise bill next month. It's not worth it. The Republican plan "had few supply-side tax rate reduction measures that would help jump-start growth," says Laffer. "The Democratic version would have actually harmed the economy," says Laffer, who adds it is "filled with loopy Keynesian demand-side logic." The Democratic version would have added more spending and "shameless tax gimmicks," Laffer says. "It would have made the tax code even more progressive." The Democrats would have extended unemployment benefits from 26 to 39 weeks. "It would encourage workers to stay unemployed for 13 additional weeks," says Laffer, citing studies on the subject. "About 90 percent of workers find work the week that their unemployment benefits run out." But the Republicans don't have much to be proud of in that regard, the economist notes. The tax rate would have been reduced by a small amount: "While better than nothing, it is clearly not something to get excited about," he says. Laffer faults President Bush for not demanding a cut in the capital gains tax or a repeal of the corporate alternative minimum tax. (The alternative minimum tax came into being because politicians thought too many corporations and wealthy individuals were evading taxes. The concept is to close loopholes so that they pay at least some taxes.) Laffer considers the alternative minimum tax complex and unfair. He also wants a capital gains cut and acceleration of income tax cuts. The tax plan was based on the Keynesian idea that the economy needed more consumer demand, says Laffer. But consumers are already getting a break: lower oil prices and interest rates, for example. What's needed is more investment. Capital spending has plunged and venture capital funding is down. A cut in the capital gains tax would help, says Laffer. I agree that the bill should die. Frankly, with the unprecedented amount of monetary stimulus we have had, and the fiscal stimulus from defense spending, I think that having both a very easy fiscal and very easy monetary policy is potentially poisonous medicine. Fiscal fillips are usually too late and too politically crafted to be economically efficacious. I'm not convinced that capital spending and venture capital investment will be stimulated too much by either capital gains tax cuts or other kinds of tax inducements. In the late 1990s, industries such as telecommunications not only spent excessively, they spent unwisely. Some of the technologies they poured money into are already obsolete, and the companies are deeply in debt. They financed their customers, only to watch helplessly as they collapsed. I question whether lower interest rates or tax incentives will turn that problem around soon. And as long as corporate accounting remains extremely dubious, an alternative minimum tax should remain on the books. In the tax plan that died, the Democrats offered social welfare and the Republicans offered corporate welfare. A plague on both their houses. Don Bauder: (619) 293-1523; don.bauder@uniontrib.com

To: Mephisto who wrote (1705)	12/29/2001 11:29:03 PM
From: TigerPaw	Read Replies (1) \| Respond to of 15516

Mephisto, I had a nice Christmas break so far. We did paint and wallpaper, well mostly it was my kids and wife. They painted the house of a family who is on the borderline of hard times and could go either way, the new paint job was an attept to push them in a hopeful direction. We went down south for the holidays, to the Republic of the Rio Grande. It's sometimes known as Laredo or Nuevo Laredo. It's a fairly large border city, but both the U.S. and Mexican component is isolated a few hundred miles from other habitation and so it retains a character that is very unique, relaxed, and insulated. We did a variety of shopping, eating, drinking, and parties. It was much fun. It's the kind of town where Christmas lights get page one of the paper and Afganistan is on page 3 somewhere. TP