Personally, I am less convinced.
Election years can be counted on to be misleading economically, since every administration knows they will get voted out of office if the economy goes bad, and if the economy is good (or seems good, which is the next best thing), then the administration in power has an excellent chance of retaining power. So, naturally, every administration will do whatever they can to improve the short-term economic situation, or at least make it appear to be improved.
Tax cuts fall into this category. They provide a temporary stimulus to the economy, but cannot significantly contribute to sustained growth (except in extreme circumstances, such as enormous and unfair tax burdens hampering growth.... and that has never been a problem in the U.S. economy). Sustained growth has little to do with taxes, much more to do with global macroeconomic realities and cycles, some of which are more or less not under our control. There are internal, local determinants also, of course: infrastructure, availability of natural resources, availability of capital, availability of suitably educated and skilled labor pools, innovative abilities, etc. etc.
To me, tax cuts accomplish pretty much the same thing for an economy that can't spend more as getting an extra credit card does for a family that has maxed out all its other credit cards, and can't buy the things it wants to, and can't manage their existing debt responsibly. Sure, they can go on a spending spree with the new credit card, but the fundamental things that determine sustained economic security in a family's situation have not changed, because they have little to do with how many credit cards they have, and what the credit limits might be. In fact, the extra credit spending only makes things worse.
There's something else in this equation that nobody talks much about also. And that is how spending is handled. This is just my opinion, but I really see little difference in how much money various administrations spend. Basically, all of them spend as much as possible. The difference lies mostly in the rhetoric and propaganda, where the spending priorities are, and how the spending tends to be dealt with. Some administrations choose to spend money on social stuff, others on defense. But the total amount spent tends to be remarkably constant (actually increasing constantly), just differently paid for.
For example, right now Bush has cut taxes. He also seems to have cut government spending. But he has also spent almost $150 billion so far on a war.
I am not making any statement at all on whether that war is right or wrong; that is not relevant to my point. Bush could spend $1 trillion on the war, and it wouldn't have much short-term economic impact, because the whole thing is financed, not paid for up front. So somebody else has to pay for it later, plus interest. It would be far different if the terms were cash on the barrelhead, no checks, no credit cards... then, the effect of the tax cuts would be more than wiped out, and in fact taxes would have to be raised.
I have a bit of a logical problem with being ostensibly overcharged on taxes in the first place, then when the government returns the excess, I am supposed to be grateful. That's like getting overcharged on your phone bill, then when you force them to make it right, for them to expect you to be grateful.
But, be that as it may, there are much more serious concerns. One is that the tax cuts are doing anybody any favor at all. When you consider that the Congressional Budget Office estimates that effect of the tax cuts will be to increase the deficit by $60 billion in FY 2003, and by $340 billion in FY 2008, you have to consider that it might make more economic sense in the long run to just forget about the tax cuts in the first place. Let 'em keep the money, it will cost me less that way. Odd, but probably true. In the short term, there will be a price to pay, but maybe that will be far less than the ultimate price tag.
en.wikipedia.org
Now, THAT I have a problem with. I think it is immoral to saddle our children and grandchildren with debt for the things we want to buy, but can't pay for. They shouldn't have to pay, just because we can't manage our spending properly. That is just flat inconsiderate and wrong. It is even worse to continue doing that, knowing full well what the consequences will be, and rationalizing it somehow as okay. It is NOT okay.
Now, this would be exceedingly unpopular of course, but I favor facing facts, even if they are expensive, or unpleasant, or politically unpopular. Facts have one overarching advantage: they are true. As opposed to wishes and dreams and fantasies. And a course of action based upon what is true can, I think, be expected to lead to better outcomes than a course of action based upon wishes, dreams, fantasies, or political expediency.
Whatever approach, the fact remains: there's no such thing as a free lunch. Somebody has to pay, sometime. The main question is who, when, and how.
My personal opinion is that it is not fiscally responsible to run up an exorbitant debt that you really can't afford, whether you are a family, or a nation. Some debt is fine, and even preferred for various reasons (a mortgage is a classic example). But excessive debt with no realistic plan for debt management and payment of that debt is irresponsible, in my view, regardless of whether you are head of a family, head of a nation, Republican, Democrat, both, or neither.
.....JMVHO.... YMMV.... BNI.... MSS
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