President Bush is preparing to make an announcement Thursday on the details of a $1.6 trillion tax cut over a 10-year period, but some University economics professors think the current economic slowdown makes for poor timing.
“From an economic standpoint, it doesn”t make any sense,” said Prof. George Johnson. “It won”t do any good in terms of averting the recession.”
In order to stimulate the economy, Johnson said, it is more important to direct the federal surplus toward paying down the national debt than to cut taxes.
The work performed over the last few years in the elimination of the debt has been immense, Johnson said.
“With one swift stroke we”d undo all of that good that we finally accomplished,” he said.
Prof. Paul Courant said the proposed tax cut won”t necessarily hurt the economy but it will not provide a quick solution.
“It”s not an inappropriate time to make some kind of tax cut in terms of the business cycle,” Courant said. “If you want to stimulate the economy quickly, it”s better to spend.”
Though the economy is falling at a rapid pace, Courant said there is no way to predict where we will be in 10 years when the full effect of the tax cut would be felt.
Both the extreme recession of the 1980s and the unprecedented growth of the 1990s were “extraordinary,” Courant said. The economy of the next 10 years will probably “settle down to a more normal point.”
Though Bush has received backing for his tax plan from Federal Reserve Chairman Alan Greenspan, the man responsible for controlling the country”s interest rates. Courant said the state of the economy is an excuse used by the Bush administration to push the tax cut.
“Bush and (Vice President) Cheney want to cut taxes They”re just using the economy as a reason,” he said. There is “no necessary connection.”
Kerin Polla, spokeswoman for Sen. Debbie Stabenow (D-Mich.), echoed Johnson”s sentiments on the tax-cut plan.
The junior senator “believes that we have to keep our economic priorities in order,” Polla said. “That means paying down the national debt first.”
Polla said Stabenow, who spoke out against the tax plan on MSNBC yesterday morning, is also concerned about keeping Medicare and Social Security fully funded.
“Nobody knows what”s going to happen,” Polla said with regard to the economy. “What”s going to