FYI: here's a letter I sent to the L.A. TIMES. As usual with such efforts, I toned down the politics in order to get it published. >Date: Wed, 09 May 2001 13:58:57 -0700 >To: "Editors, Los Angeles TIMES" <[EMAIL PROTECTED]> >From: Jim Devine <[EMAIL PROTECTED]> >Subject: Bush's proposed tax cuts > >To the editors of the Los Angeles TIMES: > >Following the lead of Garry Trudeau's "Doonesbury" comic strip, recent >letters to the TIMES have denounced President Bush's proposed tax cut, >arguing that tax cuts in Texas led to financial problems there. I don't >know about Texas, but we cannot generalize from that state's experience to >the nation as a whole. > >Unlike Texas, the U.S. government can run significant budget deficits -- >borrow money rather than paying for programs via taxes -- for years >without suffering negative effects. Further, such deficits can create >markets for business, possibly moderating any recession. As long as the >U.S. economy is fundamentally healthy, creditors will be willing to lend >to the federal government. > >The only problem occurs when the rise in government debt -- the result of >any deficits it runs -- is faster than the growth of the economy as a >whole. That was the result of the Reagan-era deficits (which were made >worse by the high interest rates resulting from tight monetary policy >then), which encouraged current anti-deficit fervor. But the problem is >not the debt itself: that's mostly the asset of U.S. citizens. (If you >don't believe me, send me all your savings bonds and T-bills!) Rather, the >difficulty is with the interest payments that must be made on the >outstanding debt, which make it hard to balance the budget, to cut taxes, >or to expand programs. > >Remember that the government debt was extremely high during the 1950s and >1960s, a period which many now think of as a "golden age" of economic >growth. And note that most people thought that running up that debt was a >good idea at the time, since it helped the U.S. win World War II. Whether >the government debt is a bad thing or not depends on how the borrowed >money is spent: is it invested in ways that not only aid people but help >long-term growth (for example, in education or public health) or is it >wasted on fluff or dubious military schemes such as the National Missile >Defense? > >It is true that a growing government debt to the rest of the world can >represent a problem, since some of the economy's productions goes to pay >the interest rather than to U.S. residents. But these days, the rise of >the U.S. debt to foreign-based lenders -- due to the large deficit on the >current account -- is due to profligate spending and borrowing by private >individuals and corporations. The U.S. federal government is currently >running a surplus and retiring part of its debt, moderating the rise of >the U.S. debt to the world. While a Bush tax might reverse this >moderation, it would not be the source of the problem. > >Instead of criticizing Bush's tax cut for causing an imaginary federal >bankruptcy, we should focus on who benefits from the cuts. Why should the >income and wealth gaps between the rich and poor (which have been widening >for decades) be encouraged to expand further by giving the former a big cut? > >James Devine Jim Devine [EMAIL PROTECTED] & http://bellarmine.lmu.edu/~jdevine
