Goldman Sachs recommends tax cuts to stimulate economy

CNBC ^ | 8-5-02 | Goldman Sachs

[SteamshipTime]

Astute analysis BTT.

The reality that all the D.C. Republicans are afraid to face is that government consumption of private sector wealth must be drastically cut as well. It is useless to cut taxes when government spends ever more money each year, incurring debt and printing money to cover the difference. The wealth-destroying effects are the same as if taxes had been increased.

[Matchett-PI]

BUMP for TAX CUTS!!!!

I wonder if ex-Goldman head, and Clinton-clone Robert Rubin, knows that a big DemocRAT mouthpeice/tool is recommending "tax cuts" to help the economy!

I would love to know what's going on behind the scenes.

Did Rubin say, "My powerful DemocRAT friends and I will agree to admit out loud that tax cuts really do help the economy, if you promise that I won't be called before the "ethics" committee investigating the ENRON/Citigroup scam"????

[rintense]

Another Tax Cut Bump!

[habs4ever]

Your analysis is dead wrong, part of the green eyeshade mentality that has been part of the Right since Hoover's day.And it is a cover for never cutting taxes, something which even the Milton Friedmans and Martin Feldsteins have been reluctant to push.

Get the incentives right, by reducing marginal tax rates, and then let the legislators duke it out over how the tax revenue is spent.But always cut taxes first!!

[finnman69]

This reminds me.

Last night I talked with an investment banker who specializes in selling swaps, derivatives and other finanical instruments primarily to large insurance companies, but also to some hedge funds to offset risk.

I asked him if the anti-capitalism media blitz is having a negative PR effect whereby companies are shying away from investments for fear that if something goes wrong, the negative PR backlash would crush them. He said this is exactly what is happening right now. Fear of being saddled with company destroying PR in this capitalist-witchhunt environment IS dampening economic recovery. Even the most conservative proposals are being turned down by CFO's and treasurers as the politcal climate is too dangerous to risk eeking out another half a percentage point on return.

99% of companies out there play by the books and the complicated financial stategies they utilize to balance risk cannot be understood by the general public or the media.

[steve50]

We continue to pass the costs on to our children, which makes us thieves imo. If the population wants big government they should be willing to pay for it.

[Freedom'sWorthIt]

Yes, indeed - the witchhunts are doing what the Demrats want them to - make corporate America scared to death to do anything. Somebody somewhere has got to bring sense into the insane picture - hopefully this little gesture by Godlman Sachs will be the start.

We need an economic guru - because the War on Terror has become a war on capitalism ----- and if we lose the latter - we will definitely be defeated in the former!

[habs4ever]

Rubin is far removed from his Goldman days, plus he's never been a tax cutter.He concocted his grand theory of raising taxes to reduce the deficit to reduce LT interest rates....yeah, that never happened, but that is the economic worldview of Bobby Rubin, a neo-Keynesian for the 21st Century.How a options arbitrageur, cum risk arb, to managing director of GS became an economic pundit is a mystery, but its more likely when you are a wealthy NYC liberal that mouths the platitudes of the NY Times, you are conferred genius status.

[Wyatt's Torch]

Did they also call for the Fed increasing liquidity to meet the increased demand that will result from the tax cut expectation? If not, it will only ignite additional deflation and things will get worse. The two must be combined.

[Cosmo]

you know, whenever republicans suggest getting rid of (or simply lowering) the capital gains tax, the Democrats say this is simply pandering to the rich. And yet the Democrats are trying to appeal to the "little guy" by pointing to the sorry state of the stock market . If only the rich benefit from investment, how do the Democrats concern themselves with the markets and keep a straight face?

[Ken H]

BWAHAHAHAHAHA!

How much did you all pay your partners for such painfully obvious financial wisdom?

GS should have just saved their money and read Free Republic!

[SteamshipTime]

I have no problem cutting taxes first, foremost, and everywhere but that has never prevented government from spending more. In response to lower tax revenue, the government does one or both of the following: it prints money by having the Fed buy dollars at cost from the Treasury and use them to purchase T-bills, a process which devalues all the existing money stock; or the government raises the debt limit, which diverts capital from investment in the private sector (creditors favor debtors who can collect revenue at gunpoint) and has the same inflationary effects.

In other words, if government spending is not simultaneously reduced but is instead increased, the tax cuts will have no net effect. Even staunch supply-siders like Reagan did not practice what they preach. Reagan increased the marketable debt substantially and approved large increases in SS/Medicare withholding in order to fund government spending.

[mo]

Dubya has yet to initiate relief of the regulatory burden on the economy. He also needs to make the Feds participate fully and transparently in national accounting standards and reform

[roberbaran]

Get the incentives right, by reducing marginal tax rates, and then let the legislators duke it out over how the tax revenue is spent.But always cut taxes first!!

It's foolish to cut taxes without cutting spending first. The government is already in debt up to its eyeballs, and we'll never live to see it operating in the black again, I fear. I hate taxes as much as the next guy, but I hate rampant spending more. As long as elected officials treat tax money as somebody else's cash and not their own, you could lower taxes until the cows come home and not do any good, except bankrupt the future of this country with debt.

It's just like dealing with credit cards. First, you stop charging on them, THEN you pay them off, THEN you live on a reduced (read: balanced) budget.

The problem isn't that politicians don't want to cut taxes (most of them do), it's that politicians DON'T want to cut spending.

[ChasingFletch]

Oh No !! Tax Cuts!!!!

Next they'll be suggesting that we be allowed to clean out the dead wood in the tinder-box forests!!! Give Me Some Truth" - J.L.

[Mad_Tom_Rackham]

The best part about tax cuts is they keep $$ out of the government's hands. Tax revenue is the ammunition for the Democratic spending war on America.

GW said as much during the tax cut debate. He said he wanted to "get the money out of Washington". Absolutely right. If the cash is there the dims will spend it.

As a contrast, at the same time as the tax cut debate was going on in Washington, the very small minority of Republicans in California were making a similar argument. The state was reaping a huge tax windfall, largely due to capital gains taxes from profit takers in stock trading. The democrats didn't give one cent back to the taxpayers. Instead they went on a three year spending binge the likes of which has never been seen in the state. Spending increased by 12% per year, to an incredible 36% in three years! To make matters worse, they based future budgets on this level of cash flow. Now that the market has tanked, the state has a structural deficit of $24B -- $50B+ if defered spending is included. The dims turned a $15B surplus into a $50B deficit in only three years.

The lesson is clear: GW was RIGHT. Get the money out of government, or you are doomed. The socialists will spend it all, and then some. You will see you tax rates skyrocket, deficits grow, debt grow, government grow, and the quality of life decline.

[ChasingFletch]

"It's foolish to cut taxes without cutting spending first.".......

Corretamundo !!!!! I'll not hold my breath awaiting the cuts in spending, I'd rather wait for Clinton pick up that gun in Israel!

[Consort]

Even little Robert Reich is now saying that we need to cut taxes.

[habs4ever]

Sorry, but once again, your analysis fails the test of emphirical evidence.Growth is the issue, and when the economy grows and does so for extended periods of time, the bite of gov't on the private sector diminishes.The backdoor route to dampening growth is through regulation, but that is not a spending issue.How you can come up with such idiocy, after the growth the US has experienced in the past two decades, suggest you are an idealogue with a scant understanding of economics.None of your thinking is correct.

[Barnacle]

Thank you, but I've heard all the recommendations I want to hear from Goldman Sachs for the next 50 years or so.