November 14, 2003
DIDN'T DEMOCRATS AT LEAST USED TO BE KEYNESIANS?:
Tax refunds expected to jump 27% (Barbara Hagenbaugh, 11/13/03, USA TODAY)
Taxpayers' refund checks will increase nearly 27% to an average $2,500 per family early next year, according to new forecasts from tax experts and economists, who say the windfalls will aid consumers, the economy and President Bush's re-election campaign. [...]The refunds will fatten bank accounts and, if spent, boost the economy because consumer spending accounts for 70% of U.S. economic activity. That will help ensure that the economic gains underway do not fizzle out, and it will ultimately benefit the 9 million Americans who are out of work.
An improving economy would aid Bush's re-election hopes and blunt Democratic criticism of job losses and economic weakness during his tenure. But the cuts, along with increased federal spending, have contributed to a record federal budget deficit that is estimated to hit $494 billion this year.
"There is a real strong correlation between after-tax income growth and the share of the vote the incumbent party candidate gets," says Mark Vitner, senior economist at Wachovia Securities in Charlotte who has studied the historical links between economics and elections.
"The economy should actually help Bush," he says.
Anyone with even a minimal understanding--or less in our case--of economics understood that President Bush would be running on the economy in '04--unfortunately, the Democrats don't fit that profile. Posted by Orrin Judd at November 14, 2003 8:12 AM
"But the cuts, along with increased federal spending, have contributed to a record federal budget deficit that is estimated to hit $494 billion this year."
Analytically worthless cliche unless qualified roughly as followed:
"contributed" is better than the usual "caused", but couldn't they have pointed out what JP Morgan's or Wachovia's economists say tax cuts (alone) have contributed to the swing in fiscal position. I recall the number being about (just) 25%. The rest: lower economic activity, lower capital gains and taxes on interest income, and MORE expenditure, and oh yeah a War.
"record levels", a pointless number unless put in the context of GDP. Of course, when shown as a percentage of GDP it is not close to a record. And of course, this is not a peacetime economy. (Swinging from spending historically little on defense -- WJC -- to something closer to the historical averages has contributed a good deal of the swing.)
And the final thought left hanging - will not deficits shrink as the economy grows, markets improve, etc? This is the key, and an often abused wish of old-time Keynsians. Tax refunds are the "bluntest" of policy tools, but this time they were applied forcefully and on a timely basis (policy working as it should) AND they were thankfully superseded in 2003 by a reductions in marginal tax rates (among other things) which are less "pump priming" and more loong-term growth inducing.
Posted by: MG at November 14, 2003 8:43 AMThe Democrats used to be a lot of things they are no more. They've been totally co-opted by the far left and either don't know it or are enjoying the ride. The south saw it coming and have, and continue to, jump ship.
It seems now to be the red states and the blue cities.
Posted by: genecis at November 14, 2003 10:34 AMMG:
The deficits WILL shrink, and in fact, already have.
However, not even the most partisan projection has the deficits being extinguished.
Add in the effects of a Medicare drug benefit, along with the already known problems with SS and Medicare, and it'll be deficits as far as the eye can see.