Tax cuts at issue.
President Bush’s large tax cut plan receives a heavy blow today from an important op-ed in the New York Times jointly written by a number of widely respected old establishment hands, all members of the Concord Coalition. (*) The statement calls for no new tax cuts. Republicans Pete Peterson and Warren Rudman join Democrats Bob Kerrey, Robert Rubin, and Paul Volcker in the piece. The Concord Coalition has a great deal of intellectual clout. (†) This piece will spark debate. If it draws in figures like Alan Greenspan to its side, the Bush tax cut could be buried.
The Concord analysis does not paint a pretty picture. Under realistic economic assumptions, federal debt as a percentage of GDP will climb from 33% in 2001 to 50% in 2013 under a Bush tax cut. The end result is that under the cut it may become economically and financially impossible to continue Social Security or Medicare for much longer past that point without drastic, even draconian, outlay reductions.
I’m looking for a good, current analysis of the balance of payments problem. As the trade deficit continues to expand, larger federal deficits could exacerbate the situation into a financial crisis.
I’ve been supportive of further tax cuts for the purpose of sparking domestic economic growth. After this, I’m going back to neutral until I can find more information.