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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: Nadine Carroll who wrote (66908)	1/19/2003 3:55:08 AM
From: LindyBill	Read Replies (1) \| Respond to of 281500

We don't get much by Friedman these days. But this one is a keeper. THE GREEDY HAND What Every American Wants I never met a tax cut I didn't like, and I like President Bush's a lot. BY MILTON FRIEDMAN Sunday, January 19, 2003 12:01 a.m. I have long said, "I never met a tax cut I didn't like"--though I would go on to say that I like some better than others. The reason for my flat, unhedged statement is neither the Keynesian attribution of an economic stimulus to a tax cut, which I believe is generally wrong, nor the supply-side attribution of favorable incentive effects to a tax cut, which I believe is generally correct. It is, rather, the effect of tax cuts on government spending. I believe that government is too large and intrusive, that we do not get our money's worth for the roughly 40% of our income that is spent by government--federal, state and local--supposedly on our behalf, or the additional 10% or so of income that residents or businesses spend in response to government mandates and regulation. History suggests that Washington spends whatever it receives in taxes plus as much more as it can get away with. Deficits have been the norm. The few exceptions--such as the Clinton surpluses--are an accident of divided government; in President Clinton's case, a Democrat in the White House, a Republican House and Senate. And as we are already seeing, such surpluses are not here to stay. I conjecture that they would have faded away even if there had been no 9/11, and no Iraq war danger. Under those circumstances, how can we ever cut government down to size? I believe there is one and only one way: the way parents control spendthrift children, cutting their allowance. For government, that means cutting taxes. Resulting deficits will be an effective--I would go so far as to say, the only effective--restraint on the spending propensities of the executive branch and the legislature. The public reaction will make that restraint effective. Many discussions of the economic effect of tax cuts and deficits implicitly assume that government spending is predetermined and independent of whether there is a tax cut or a deficit. In that world, deficits are produced entirely by a shortage of tax receipts. Raising taxes can eliminate the deficit without affecting spending. As I see the world, the situation is very different. What is predetermined is not spending but the politically tolerable deficit. Raise taxes by enough to eliminate the existing deficit and spending will go up to restore the tolerable deficit. Tax cuts may initially raise the deficit above the politically tolerable deficit, but their longer-term effect will be to restrain spending. Of course, some tax cuts are better than others. Tax cuts that increase incentives to produce and that eliminate distortions in the price system--supply-side tax cuts--give a double whammy. They restrain government spending and increase future income and current wealth. Permanent tax cuts are much to be preferred to temporary cuts. They are a stronger restraint on spending and do not need to be repeated. From this point of view, President Bush's tax proposals rank very high. Eliminating double taxation of corporate earnings will end the present bias toward debt rather than equity in the financial structure of corporations as well as the present bias toward retaining earnings rather than distributing them as dividends. The combined result will be a more effective distribution of capital, and will promote a more effective market for corporate control. Making the already voted tax reductions permanent, bringing their effective dates forward, and lowering the rates further improves the quality of the already enacted tax cuts. These changes increase the restraint on government spending and increase incentives for taxpayers to work, invest, and take risks. I do not know whether the tax cuts will or will not stimulate the economy in the short run. They put money in the pockets of taxpayers to spend; but simultaneously they take money out of the pockets of the investors who buy the government securities that finance the tax cut, money which would otherwise presumably have been spent on private investment projects. The net effect on total spending could go either way. Whatever may be that outcome, a major tax cut will be a step toward the smaller government that I believe most citizens of the U.S. want. Mr. Friedman, a Nobel laureate in economics, is a senior research fellow at the Hoover Institution. He is co-author, with his wife Rose, of "Two Lucky People: Memoirs" (University of Chicago Press, 1998).

To: Nadine Carroll who wrote (66908)	1/19/2003 4:46:40 AM
From: LindyBill	Read Replies (1) \| Respond to of 281500

"Little Green Footballs" ARAB LEAGUE CONDEMNS NASA LAUNCH Arab street 'explodes' in the wake of 'illegal Zionist occupation' of Earth orbit DUBAI, United Arab Emirates (al-Jee'ef) - The Arab League "strongly condemned" today the launch of the NASA space shuttle Columbia with Israeli astronaut Col. Ilan Ramon on board. "This is surely but the first step towards complete and outright illegal Zionist occupation of space," said Arab League spokesman Abr Souffla. "We will not sit idly by and permit this usurpation of a cosmos that by birthright belongs to the Palestinian people and their Arab and Muslim brethren. The Israeli occupation of Palestine must end, and the Zionists must not be permitted any further territorial grabs of Historic Palestine, whether in the West Bank or in low earth orbit." In Gaza City today, thousands of Palestinians marched in the streets, many firing weapons into the air. "With our blood and our souls, we will strike the orbital Zionists," chanted the protestors. Sheikh Yermani-Makr, appearing on Palestinian television, said, "It is not enough that the unbelievers have come on our land, but now they also take our heavens? How can this be permitted?" Palestinian youths also took to the streets in Nablus, chanting, "One! two! Where's the Arab manned space program?" In Nablus, three Palestinian youths were dragged through the streets by members of the al-Aksa Martyrs Brigade, who accused them of being "collaborators." Witnesses said that the teenagers were heard making positive statements about the American science fiction program Star Trek, several of whose main characters were played by Jewish actors. Reports of the teenagers having received "atomic wedgies" were unconfirmed. In New York today, UN Secretary General Kofi Annan said that an Israeli presense in space is "unhelpful" and would only serve to further aggravate tensions between Israelis and Arabs. The sentiment was echoed from Madrid by EU representative Javier Solana, who said that what the Middle East needed was more negotiation, and "less cosmic adventurism." Yaser Arafat's live speech on the Qatar-based pan-Arab satellite network al-Jazeera today was quickly discontinued as he began talking about "Martyrs by the millions, floating toward Jupiter."

To: Nadine Carroll who wrote (66908)	1/19/2003 8:15:19 AM
From: LindyBill	Respond to of 281500

Latest on the Israeli elections from the J Post. Likud poll: Labor, Shinui neck and neck Gil Hoffman Jan. 19, 2003 A poll commissioned by the Likud Thursday night predicted that the Labor Party and Shinui would both end up with 18 mandates. This is the first time a poll found Labor to be in danger of becoming the third-largest faction in the Knesset. A Labor poll taken the same day predicted that Labor would receive 22 mandates and Shinui 17. A poll taken by pollster Rafi Smith last week found that Labor and Shinui had the same degree of support when Arab votes were excluded. Labor Party chairman Amram Mitzna spent the weekend campaigning in the Arab sector. Labor and Likud both intend to use this week to shore up support on their sides of the political spectrum, targeting voters considering smaller parties on the extreme left and right. Both parties will premiere commercials featuring 1996's prime ministerial candidates. The Likud will use Foreign Minister Binyamin Netanyahu talking about the importance of a strong Likud in campaign commercials targeting National Union and National Religious Party voters that will begin to air Sunday night. Veteran Labor MK Shimon Peres will be featured in new commercials praising Mitzna and ruling out Labor's participation in a national-unity government led by Prime Minister Ariel Sharon. Transportation and Environment Minister Tzahi Hanegbi said in a political gathering in Holon on Saturday that the Likud intends to first ask right-wing and religious parties to join a coalition if the Likud emerges victorious in the January 28 election. He said that only after the Likud's traditional partners came aboard would the Likud ask Labor to join. Several officials present at the event reported that Hanegbi said the Likud would join a national-unity government led by Mitzna if Labor wins the race, but the minister's spokesman denied that he said it.