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Wed 2 Mar, 2005 02:17 pm
Greenspan says cut the deficit, but the president says 1) deficit will be cut in half - after he leaves office, 2) doesn't explain how he intends to fund privatization of social security that'll cost an extra one to two trillion dollars, 3) doesn't include the cost of the war in Iraq that's costing from four to five billion every month, and 4) he's never vetoed a spending bill.
If Bush is a Conservative, Demorats have a bigger problem if and when they take over DC.
Is tax reduction a liberal measure, may I ask? Large deficits have been linked to Republican administrations, remember Reagan, whose economic policy bears a great resemblance with the measures Bush is now implementing . In fact, Martin Feldstein, who is likely to be the next chairman of the Federal Reserve, was Reagan's chief economic advisor. He firmly defends tax cuts as the way to improve productivity and employment, an opinion nevertheless heavily discussed in economic research (the champion of economic freedom, Milton Friedman, holds serious reservations about Feldstein's ideas about the effectiveness of tax cuts).Feldstein also shares the President's view on Social Security matters(if he has not directly inspired his partial privatization program), Don't confuse a genuinely liberal economic policy with a conservative one which simply doesn't follow orthodoxy. I am sure Liberals will never apply such measures.
On the other hand, I think Dems may be right for once. Claiming against deficit (although contradictory with their beliefs, I wonder what they'd have said if this had happened during Clinton's administration) is generally right, according to basic economics theory. Trying to increase economic activity and production trough public spending and tax cuts (measures focused on the demand curve) will only have effect for a short while. On the long term, the result will be an increase in prices and no substantial changes in national wealth, production or income. But the marginal group Mr. Feldstein leads thinks in a completely different way, and seems to establish current Republican economic policies as well as Kristol and Kagan are doing with foreign affairs strategy.
Thomas, Good post. I see the US economy struggling more in the future as our educational system fails to produce the skills necessary to compete in the high tech and biotech fields. Our governments are handling most things economics and education very badly. I see nothing but rough roads ahead for Americans.
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