Economists Blast Bush Tax-Cut Proposal

Reuters News Service ^ | 02-10-03 | Reuters

[Norm640]

WASHINGTON (Reuters) - Economists led by 10 Nobel laureates on Monday attacked President Bush (news - web sites)'s $695 million tax-cut proposal, arguing that the cuts fail to address the problems facing the U.S. economy and will add to long-term budget deficits.

Their signed statement, to run this week as a full-page advertisement in the New York Times, comes as Congress prepares to examine the details of the Bush proposal.

Economic growth that is not sufficient to generate jobs, corporate scandals, business overcapacity and uncertainty continue to weigh on the U.S. economy, the statement said.

"The tax plan proposed by President Bush is not the answer to these problems. Regardless of how one views the specifics of the Bush plan, there is wide agreement that its purpose is a permanent change in the tax structure and not the creation of jobs and growth in the near term. The permanent dividend tax cut, in particular, is not credible as a short-term stimulus, said the statement, signed by more than 400 economists.

The Nobel laureates include Joseph Stiglitz, who served on the White House council of economic advisers under President Bill Clinton.

The economists' statement, is sponsored by the Economic Policy Institute, a liberal Washington think tank.

The four-paragraph statement, made public at news conference on Monday, said the economy is expanding but not fast enough to create jobs.

The administration plan calls for an end to taxes paid by individuals on corporate dividends and acceleration of planned income tax cuts.

Administration officials, including Treasury Secretary John Snow, are planning a series of meeting this week across the country intended to generate public support.

The proposal, which has come under fire from congressional Democrats, will reduce federal revenues by nearly $700 billion over the next decade.

Democrats argue the tax cut will benefit mostly the wealthy while adding to budget deficits. Republican backers argue the tax cuts will lift economic growth and bring in more revenues.

Moderate Republicans who hold key votes in the narrowly divided Senate are, however, cool to the proposed dividend tax cut, the centerpiece of Bush's plan.

Lawmakers this week will begin to take a closer look at the plan. The Senate Finance Committee has scheduled two days of hearings this week.

Separately, Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) is expected to his offer assessment of Bush's proposal in testimony on Tuesday to the Senate Banking Committee and on Wednesday to the House Finance Committee.

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[Norm640]

Wow, I could never guess that a Clinton economic advisor and a liberal think tank would be against the President's tax plan. Who would have thought?

Also notably missing from the article are any of their solutions to what ails the economy--I guess they are just true blue democrats--complain, but don't offer solutions.

And a protest by a bunch of nobel laureates is about as threatening as the "poets against the war" crowd.

We wait for substance from the Left.

[Protagoras]

No names of the ten Nobel prize winners is given. Has Stiglitz won one? If so I missed it.

[Sam Cree]

Yeah, socialism is an economic theory in many ways. A failed one, though, which these dummies haven't figured out.

[Sacajaweau]

Would like to see the Party Registration of each of these guys.

And their solution would be?? The same as the Dem parties??? Take ALL our money???

[AntiGuv]

These are the ten Nobel laureates:

George Akerlof*
University of California-Berkeley
2001 Nobel Prize

"for [his] analysis of markets with asymmetric information"

Kenneth J. Arrow*
Stanford University
1972 Nobel Prize

"for [his] pioneering contributions to general economic equilibrium theory and welfare theory"

Lawrence R. Klein*
University of Pennsylvania
1980 Nobel Prize

"for the creation of econometric models and the application to the analysis of economic fluctuations and economic policies"

Daniel L. McFadden*
University of California-Berkeley
2000 Nobel Prize

"for his development of theory and methods for analyzing discrete choice"

Franco Modigliani*
Massachusetts Institute of Technology
1985 Nobel Prize

"for his pioneering analyses of saving and of financial markets"

Douglass C. North*
Washington University
1993 Nobel Prize

"for having renewed research in economic history by applying economic theory and quantitative methods in order to explain economic and institutional change"

Paul A. Samuelson*
Massachusetts Institute of Technology
1970 Nobel Prize

"for the scientific work through which he has developed static and dynamic economic theory and actively contributed to raising the level of analysis in economic science"

William F. Sharpe*
Stanford University
1990 Nobel Prize

"for [his] pioneering work in the theory of financial economics"

Robert M. Solow*
Massachusetts Institute of Technology
1987 Nobel Prize

"for his contributions to the theory of economic growth"

Joseph Stiglitz*
Columbia University
2001 Nobel Prize

"for [his] analysis of markets with asymmetric information"

[luv2ndamend]

Here is a link to them.

http://www.epinet.org/stmt/2003/econlist_final.html

[CyberAnt]

Sorry ... but there were 110 (ONE HUNDRED & TEN) economist who have already endorsed the President's plan as brilliant.

Tell the dems to shut up!!

[The Electrician]

The economists' statement, is sponsored by the Economic Policy Institute, a liberal Washington think tank.

I'm surprised, though glad, to see Reuters get this one right. The Economic Policy Institute, which numbers Robert Reich among its founders, claims to be "non-partisan". However that is just another Democrat lie among many.

[Sacajaweau]

400 economists signed this. So what!!

Economists are a dime a dozen and Nobel Laureats in economics are "somebodies" who wrote a good paper. Big deal!!

What amuse me is that the Dems would go through the solicitation of these people to come up with a big group. Those darn FBI files must be loaded!!

[kwyjibo]

Who cares what they think? Everything they said may be true. So what? The economy will right itself in due time, regardless of whatever "stimulus" is offered. Tax cuts may not offer the "proper" short-term stimulus but will definitely benefit the economy over the long haul.

The biggest problem with the tax cut debate is that the status quo is somehow assumed to be the "fair" and "right" level of taxation with no need for explanation. The questions that should be asked for those who oppose tax cuts is "Why are today's tax rates best for America?"

[Protagoras]

Thanks. No Austrian School guys there. (Chicago)

[MarkM]

The title should be, "Left wing economists against tax cuts".

Milton Friedman and some of his Nobel prize winning friends have written a letter in favor of the tax cuts.

So there, lefties, our guys are better than your guys.

And besides, I don't have a Nobel prize and I want all taxpayers to have a tax cut.

[nmh]

"The Nobel laureates include Joseph Stiglitz, who served on the White House council of economic advisers under President Bill Clinton.

Who cares what a bunch of leftists and Demoncrats feel. It's obvious they don't think.

[Republican Wildcat]

This comes from a liberal think thank, yet it gets a huge headline and a full news story. No bias here.

[golder]

Perhaps these economic prodigy should be educated about SSI. It is NOT a tax!! It is a contribution to ones retirement fund. The deduction stops after one makes around 75k. If a person makes 250k, much is not subject to the SSI contribution. When leftists decry, the rich don't pay, they are liars of the first degree.

As a self employed single man, no children, shack on 10 acres paid for, soon to be livable, making about 50-55k, I pay 50+%. It doesn't help living in California. As every government agency searches for new, more clandestine taxes, I laugh. I quit my job, my business, too expensive. This economy will never see good times again. 50-60% is too high.