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Bush tax cut -- political brilliance?(19 posts)

Bush tax cut -- political brilliance?TJeanloz
Apr 28, 2003 7:41 AM
In watching the Sunday news shows, and seeing the various viewpoints on the tax cut (which I'm not really qualified to judge on its merits), something occurred to me: Bush can't lose.

First, the background: Bush proposed a ~$750B cut, Congress {acutally the moderate Republicans) came back and said "how about ~$350B", Bush says "we'd like at least $550B". It looks likely that it will fall somewhere between 350 and 550.

There are a few outcomes possible from this tax cut:

1. Economic disaster. Cut fails to spur economic growth. Bush says: "I tried and tried to cut taxes to spur the economy, but Congress wasn't willing to do enough to create jobs and promote growth; I did all that I could to help this economy".

2. Slow road to recovery. Cut delivers some growth, no deficit crisis emerges. Bush: "I told you tax cuts would spur the economy, if Congress had only done more, we could have this economy really moving."

3. Economic success, on a smaller cut. Bush: "I knew this was going to happen, and the surplus dollars that are rolling in should be rolling into the pockets of Americans, instead of government coffers."

Bush has used a classic negotiating tactic (maybe that Harvard MBA is doing some good); he asks for something way more than he knows he can get, and when he doesn't get what he asks for, whatever bad comes of it falls on the shoulders of those who stood in the way, and he claims credit for all the good stuff. Quite a move really.
No question. It would take aOldEdScott
Apr 28, 2003 7:46 AM
politician the calibre of Bill Clinton to pick those arguments apart, but we don't have anyone of that calibre in the field this year. Alas.
A good negotiater..ClydeTri
Apr 28, 2003 7:52 AM
always starts off with a figure he is willing to back off of...that is horsetrading 101.
Demo response?DougSloan
Apr 28, 2003 7:54 AM
Of course, the best way to win a debate is to fight on your own turf, almost ignoring the other side.

The Demos, regardless of the effect of the cuts, will argue that any cuts disproportinately help the rich, and that any claimed recovery was had on the backs of the "working poor". They will parade lots of people who are unemployed across the stage to say the cuts did not help *them*, and that any claimed success is hocus pocus. Or, if the recovery is obvious, of course they will attribute it to anything but Bush, in fact, that it occurred despite Bush.

Now, can any of the actual candidates convey these messages convincingly? Might be tough.

Doug
I think you give him too much creditColnagoFE
Apr 28, 2003 8:09 AM
I'm guessing option 1. Massive cuts didn't work for Reagan and they aren't gonna work for Bush either. And the cut thing is so unoriginal. What is brilliant about it? Republicans have been singing this same tune for years.
ah....ClydeTri
Apr 28, 2003 8:15 AM
Tax cuts did work for Reagan..they take to take effect...tax incomes to the govt rose under reagan, just spending did much more so..
Only electoral dimmness will make this tax cut look brilliantContinental
Apr 28, 2003 10:17 AM
In a dim room a 10 watt light bulb looks bright. If a significant portion of the electorate votes for Bush because of this tax cut, it will be due to the dimness of the voters, not the brilliance of the leaders. I don't think anyone with any economic knowledge and any degree of objectivity thinks that these proposed tax cuts will help the economy before the 2004 election. However, most of the electorate is innumerate and has abject ignorance of economics. I'll be voting for the Bush adminstration in spite of this tax cut, not because of it.
has the economy improved since the first Bush tax cut? nmDougSloan
Apr 28, 2003 10:37 AM
Layman's QuestionJon Billheimer
Apr 28, 2003 10:54 AM
Since the U.S. consumer is tapped out and the net savings rate is zero (according to what I read)does it not make sense that if the government wants to stimulate the economy it would need to leave more money in the consumers' pockets? That is, by reducing income taxes in some way shape or form? Of course, I would think to prevent spiralling deficits government expenditures would need to be reduced at the same time. (I really want to hear from someone who has some professional knowledge here. This is not an ideologically driven question, just some common sense musings.)
Manufacturing SectorContinental
Apr 28, 2003 11:48 AM
I work in facility planning for a manufacturing company. There is excess manufacturing capacity for nearly every product in the economy, so a small increment in consumer spending will not result in capital spending and job creation. Plus, many items with a purchase price of a few hundred dollars (which is the amount that most households will benefit annuallly) are Asian imports. If higher Federal deficits lead to higher interest rates, as many believe, it will be harder get an acceptable return on investment for any proposed capital project. Higher interest rates would also take money out of consumers' pockets. In effect, the Bush tax cut is a plan for the Federal Government to take out loans on behalf of the taxpayers.
Net savings rate NOT zeromoneyman
Apr 28, 2003 3:31 PM
From PlanSponsor.com, a site for pension sponsors:

Accounting Switch Turns Around Savings Rate
February 24, 2003 (PLANSPONSOR.com) – A revamped accounting procedure to measure Americans’ monthly personal savings rate (PSR) that includes government workers’ retirement accounts has made a dramatic difference in the bottom line.
Under the previous accounting, government employees’ retirement savings was considered government savings because it was under government control, according to the Bureau of Economic Analysis (BEA), which generates the PSR data, a story from Bankrate.com reported.

Now, with both private and government pension savings taken into account, the personal savings rate hasn't dipped below 3.4% since January 2002, and it's been as high as 4.5%. Before the change, BEA reported a negative savings rate from August 2000 to April 2001.

Despite the improvement, the PSR still isn’t as high as it once was. From 1946 to 2002, the average personal savings rate was 7.8%. The highest annual percentage rate during that period was 10.9 % in 1982.


A reduction in payroll taxes would be the fastest and most dramatic method of putting spendable dollars into the hands of the consumer.

$$
actually yes..but..several points...ClydeTri
Apr 28, 2003 11:51 AM
The economy is like a huge ocean liner..takes a long time to turn it in any direction...the recession started in Clinton's last year...other point is there are always multiple factors that any president, be it repub or democrat can not control, such as the world economy, wars in far off lands effecting oil prices, and most importantly for us, September 11 set our economy way back. It almost has killed the airline industry. Doesnt matter who was President, would have been the same..very often Presidents get the luck of the draw with respect to the economy..they can affect it much less than we give them credit for. Also, when I say Presidents, it is really the President/Congress in unison.
Right on...No_sprint
Apr 28, 2003 12:13 PM
Cyclical too. I would venture to say that most president's *assumed* economies are not their's at all, even if they're in for two. It's a mighty big ship, no one person has near the power to turn it.
But it only takes one person to spot the iceberg. (nm)czardonic
Apr 28, 2003 12:39 PM
Sorry,ClyeTri, the recession really started...cycleaddict
Apr 28, 2003 12:35 PM
in the first year of GWB's term--I know that fact really pains the "hate Clinton firsters", but it's the truth.
I also believe that 9/11 would'nt have happened if there been someone in office that hadn't so blatantly dissed the Palestinians and the middle east peace efforts. 9/11 was, plain and simple, PAYBACK time.
wrong....ClydeTri
Apr 28, 2003 12:49 PM
all the economic indicators had turned south by the fall of 2000. Many economists were begging Greenspan to cut interest rates before the election, but he held off on the serious rate cuts...the stock market started trashing during the dot com bust and when the feds went after Microsoft, which was clinton era..I am not bashing clinton here....it is very cyclical and presidents are usually just somewhat along for the ride and they can only make minor adjustments...
You're rightpurplepaul
Apr 28, 2003 1:01 PM
The economy is waaaaaaaay too complicated to be seriously effected by the limited tools the government has. The economy is cyclic and some presidents are just lucky. For instance, if not for the complete irrationality of investors (which is part of the cycle, but who can predict?), bidding up worthless companies to many times the value of established blue chips, the economy would have been, who knows? But probably nowhere near as strong as it was for a while.

I really cringe when either side takes credit for the economy at the moment. Short of printing money indiscriminantly, there's not much that can turn the economy one way or the other before its time.
sorry ....addictbic
Apr 29, 2003 3:00 AM
you are just an addict that has no basis in fact.
They know betterdasho
Apr 28, 2003 5:24 PM
Another tax cut might help a wee bit like the first one did but I don't think it will create many jobs which is really what is needed. I can't believe Bush really thinks this will do anything more than make him look good come election time.

The US is losing manufacturing jobs left and right to countries like China and Mexico because of NAFTA. The CEO at my work place claims there are two types companies; ones that presently have plants in China and ones that will have plants in China. Now I'm hearing more and more that the "high tech" jobs the politicians claimed would be created by NAFTA are going to countries like India and Vietnam.

What I don't understand is who do the corporations think will be able to buy their goods if the economy in America (52% of the world's economy) continues to slide? It's like the fellow sawing a tree limb while he is sitting on it. Maybe in the short run, those companies will make money but sooner or later it will catch up to them (and us).

The experts say this isn't a recession but where I live in North Carolina it is very bad. Many manufacturing and engineering jobs lost. A friend with a masters degree who worked at Nortel for 22 years is now installing DISH satellites. Several engineers out of work for one year and now painting houses etc.

I know it's a big challenge for Bush and his administration but sooner than later people are going to lose interest in Iraq etc. and look at their empty pocketbooks.