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

To: Johannes Pilch who wrote (340754)	1/9/2003 12:03:53 PM
From: Kenneth E. Phillipps	Read Replies (1) \| Respond to of 769670

And the Bush Administration has the worst record of any post WW2 Administration on job creation.

To: Johannes Pilch who wrote (340754)	1/9/2003 1:45:10 PM
From: steve dietrich	Read Replies (1) \| Respond to of 769670

Here's an interesting article that pretty much says it all: Bush's Tax-Cut Package Is Not a 'Stimulus' Plan President Bush is right not to tout his new economic plan as a "stimulus." It won't do much to boost economic growth in the coming months. The centerpiece proposal -- an elimination of taxes on dividends -- won't be felt by most taxpayers until they file their taxes next year. And if the goal is to boost business investment, the plan could prove counterproductive, encouraging businesses to pay out earnings, rather than reinvest them. Administration aides argue that the dividend-tax cut will boost the stock market, which in turn will raise consumer spending. But it's disingenuous to argue a modest rise in stocks will cause a big increase in consumer spending, given that the more than 50% decline in stock prices over the past three years has had such modest effects on spending. The other half of the president's package will have a more immediate impact, pumping $80 billion to $100 billion into the economy over the next year through tax cuts, rebates and new spending. But in a $10 trillion economy, that's not much. Like most stimulus proposals of the past, this one likely will prove to be too little and too late. So what's the point? President Bush is practicing the art of the possible. The Republican victory at the polls in November, combined with growing political demand for action to spur the economy, has created a moment of opportunity. And the Bush administration wants to take advantage of that moment by pushing through a proposal it would favor even if the economy weren't in the doldrums. That makes sense politically; if done correctly, it can make sense economically, too. Former Treasury Secretary Paul O'Neill was right when he said that the economy didn't need a broad-based stimulus. But he was wrong in failing to recognize the political need for action, and the opportunity for an economically sound response. Viewed in this light, eliminating the tax on dividends is a good idea. As a matter of fairness and economic efficiency, there's no reason why some corporate earnings should be taxed twice -- once at the corporate level and once when paid out as dividends -- while other earnings are taxed once or not at all. And given the corporate scandals of the past year, there's no reason for government to discourage the payout of dividends -- which have to be paid in cash, not the funny money that has pumped up corporate earnings statements in recent years. But if the goal of this tax bill is to make sense of the current corporate-tax mess, it needs to attack the problem from both directions. Along with eliminating overtaxation, the bill should crack down on corporate-tax shelters, close loopholes and work to bring the tax code's definition of earnings in closer alignment with the earnings that companies report to their shareholders. The exaggerated corporate earnings statements of the late 1990s were made possible, in part, because so many companies paid neither dividends nor taxes on those inflated earnings. Instead, they promised investors an ever-rising stock price, and reported little or no taxable income to the Internal Revenue Service. Dividend payments became increasingly rare, and the gap between book earnings and tax earnings grew ever larger. It's time to reverse that trend. If companies have to pay both dividends and taxes on their reported earnings, they'll have far less incentive to play games. Mr. Bush has taken a step in the right direction, by ignoring demands from business groups to punch even more holes in the corporate-tax code, in the name of stimulating investment. Congress should push even further, offsetting the high cost of the dividend-tax cut -- $300 billion over 10 years -- by closing existing loopholes. Mr. O'Neill has clearly signaled his sympathy for such a move. So has the incoming chairman of the Senate Finance Committee, Charles Grassley. And even House Ways and Means Chairman Bill Thomas gave his support to some surprisingly tough measures against corporate-tax shelters last year. The White House may resist such efforts, in the interest of avoiding a fight with business and winning quick passage for its bill. But no one should be fooled by promises of another tax bill later this year. The president's economic package is likely to be the one and only chance to make significant tax changes before next year's presidential elections. Any measures that are postponed until the "second bill" likely will be delayed indefinitely. The principle behind all of this is simple. Corporate earnings should all be treated the same. They shouldn't be taxed twice; they shouldn't escape taxes altogether. An administration that believes in markets shouldn't support a tax code that looks like a theme park, with free rides for favored interests. Updated January 7, 2003