Re: Bsuh on meet the press on Sunday
jg,<br /><br />I've taken many an economic class. One thing they teach you is that different circumstances require different solutions.<br /><br />The difference between the Reagan tax cuts, for example, and to the extent they were successful, and the current Bush tax cut, is that the country faced dramatically different circumstances in those days.<br /><br />We were living with double digit interest rates, Money market accounts were yielding double digit returns, and in order to get investment going in the economy, something had to be done, as to get someone to invest where there was any risk would require a return in the 20% range or better, which are extraordiarily difficult to find. Tax cuts, some investment tax credits, and the like make very good sense in that situation, and would tend to stimulate the economy.<br /><br />The circumstances today are far different as there is has been no shortage of investment capital, but there has been a shortage of consumer demand. With money markets rates in the low single digits, there is no shortage of money to invest in a good business plan.<br /><br />To the extent that tax cuts stimulate consumer demand, they can help tremendously, and a small percentage of the tax cuts have done just that. The problem is that the majority of the tax cuts have gone to those that will not spend it to stimulate the economy, but have only tended to increase the deficit.<br /><br />Frankly, the irony is that had the tax cuts been targeted to the middle class consumers, in the form of reductions in the income tax rate, and more importantly, payroll tax relief, it would have dramatically improved the results of the highest income people in added economic growth, even if their tax rate had stayed the same.<br /><br />It is a completely different situation than what faced the country under Reagan, and different solutions were warranted. Unfortunately, they were not used.
