The only thing we knowI

by Prometheus 6
July 19, 2003 - 5:27am.
on Old Site Archive

The only thing we know

I am not an economist by any stretch. But this I know: the economy itself will die if there are insufficient consumers. And Tax cuts don't create more consumers—only jobs can do that.

Outlook Better or Worse? Depends Who's Talking
By DANIEL ALTMAN

In the debate about tax cuts and federal budget deficits, both sides are making arguments that can never be proved.

After the White House announced forecasts for record deficits on Tuesday, Democrats rushed to accuse President Bush of guaranteeing future cuts in Social Security and Medicare benefits. They have also asserted that the disappearance of $6 trillion in federal surpluses will push up long-term interest rates and dampen spending by consumers and businesses.

But because there is no second chance at history, Democrats can only guess at what might have been had the policies of the Bush administration not been enacted.

Similarly, Republicans have contended that the tax cuts they pushed will generate millions of jobs that would not otherwise have existed. But that contention, like the eventual outcome for the economy, can only be compared against an unknowable alternative.

"We're in the middle of an experiment right now," said John H. Makin, director of fiscal policy studies at the American Enterprise Institute, a research group. He joined other economists in saying there may be some truth to all three notions — the higher interest rates, the strain on federal programs and the extra jobs — but to what extent depends largely on the frame of reference.

[Listening to: Chitlins Con Carne - Kenny Burrell]

posted by Prometheus 6 at 7/19/2003 05:27:43 AM |

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