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Musings and Meanderings
Wednesday, January 18, 2006
Treasury Secretary, John Snow: “Business investment literally turned around overnight when those tax cuts took effect”.
Vice-President Dick Cheney:“It's getting pretty hard for the critics to make the case that somehow those tax cuts weren't good for the economy,”
President Bush is even intimating that his Tax Cuts will Pay For Themselves....
Do these guys live in the same world as economists, scientists or even you and I?
No serious economist believes Mr Bush's tax cuts will pay for themselves. A recent study from the Congressional Budget Office suggested that, after ten years, up to one-third of the cost of a 10% cut in income taxes can be recouped from higher economic growth. That's one third (1/3) Dubya, not all (1/1).
A University of Michigan study suggests that the temporary investment incentive did raise output by a modest 0.1% during 2003 and 2004.
A Berkeley study shows that the dividend tax cut prompted firms to pay more dividends, but whether it boosted share prices is open to interpretation.
Neither of these show any causality with the tax cut of 04 and economic growth. Growth is cyclical, and President's usually have little or no impact on that. I don't give Clinton any credit for the roaring 90's either by the way.
Worse GWB is still going on and on about halving the deficit by 2009, but the administration's forecast assumes no reform of the Alternative Minimum Tax and it consistently underestimates the cost of the war in Iraq. A new paper from a study done by Harvard, claims that the total budgetary cost of the war could exceed $1 trillion.
Besides if GWB and his band of merry men really believed in Tax Reform wouldn't they be working on the Tax Reform platform they run on in 04?