"Gould 0738" wrote in message
...
PETER PETERSON: You and I are going to be getting tax cuts, so that my
six
year old, nine year old, five year old, etcetera, grandchild can pay
bigger
taxes in the future.


One problem with that theory: Peter will either (a) spend the tax refund,
or
(b) save it, and eventually leave it to his kids. Either way, the money
finds its way back into the economy...rather than in the hands of the
government.


Huh?

The tax cuts only work if they are accompanied by equivalent decreases in
government spending.

Huh?

What do mean by "work"? Do you mean "the tax cuts only work to spur the
economy..."? If that's what you're saying, then you're wrong. The way out
of a recession is through *spending*. People spend their tax refunds...and
the government deficit spends.


It isn't the "tax cut" that our kids will be paying back,
specifically, it's the federal debt, (and the interest on that debt) that
is
resulting from
cutting our tax income while we increase our government expenses.

So what. The two reasons why a deficit (or even a snapshot of the debt at
any given time) doesn't matter:
1) the government can borrow ad infinitum. It's like having a mortgage
that's amortized over an infinite number of years.
2)the national debt fluctuates in cycles. In times of recession, war, etc,
the debt goes up. In economic booms, it goes down.

The reason the debt falls in economic booms is due to the increased net
revenue from taxes. Even if you cut the *rate*, the total revenue can
increase if GDP goes up proportionately. It's the same premise as a retail
store running a sale. You have a lower margin on each item, but the
increased volume causes a net increase in profits.


Your guy's abject financial failure isn't the tax cut- it's the tax cut
*without* a decrease, indeed an incredible *increase* in the federal
budget.

Bush is predicting the deficit will be reduced in half by 2006...even while
maintaining the current tax rates and spending habits. Let's see if he's
right. I, for one, believe he is.