From: mccall@mksol.dseg.ti.com (fred j mccall 575-3539)
Subject: Re: The blame game
Organization: Texas Instruments Inc
Distribution: usa
Date: Mon, 14 Sep 1992 12:49:14 GMT

In <21498@rpp386.lonestar.org> jfh@rpp386.lonestar.org (John F. Haugh II) writes:

>Yes, by that same argument, Bush is to blame.  The lessons of the past
>show that tax increases (and/or tightened monetary policy) slow down an
>economy, and that tax decreases (and/or loosened monetary policy) speed
>up an economy.  

True, but incomplete.

>Bush promised "No New Taxes", broke that promise, and
>the economy slowed.  

True, but coincidental so far as everything I've seen indicates.  The
problems with the American economy are largely structural in nature,
and changes in general tax rates don't do anything to address that.

>There are only two fixes - loosened monetary policy
>(and no, lowered interest rates ARE NOT how you ease monetary policy,
>you have to actually lend the money, and banks aren't doing that ...)
>or lowered taxes.  

Untrue, because of the "only" -- as I said, the prescription for ways
to stimulate the economy was incomplete.  Banks aren't failing to lend
the money through choice; the credit markets are just that soft on the
demand side right now.  Lowering the interest rate doesn't do anything
to stimulate the economy unless there is actual pent-up credit demand.

>Clinton promises to raise spending, which will have
>to be paid for by higher taxes.  

Really?  And here all this time I thought you were telling us that tax
revenues went up when taxes were LOWERED.  Now you claim increased
spending "will have to be paid for by higher taxes".  Once again when
comparing two of your notes, I find myself prompted to ask "which is
it?".  Oh, and just by the way, the reason your expositions on
economic stimulation were incomplete above was that they totally
ignored FISCAL policy.  In other words, increased spending by the
government tends to spur the economy in the short term.  The economic
growth then increases tax revenues (without increases).  We have had
the slowest economic growth since Herbert Hoover during the Bush
Presidency, which goes a long way toward explaining the huge deficits
he's run up.

>Bush has FINALLY started talking about
>lowering taxes and lowering spending.  We've been promised an end to
>the Federal Deficit before (anyone remember Gramm-Rudman?), but if
>Bush is elected, we may actually see it.  

So, why do you believe him THIS TIME?  What's changed, besides it
being an election year in which he is in danger of losing his job?

>If Clinton is elected, the
>deficit will be $500B next year, and $800B by the end of his first
>term.

Oddly enough, your figures don't match those contained in Clinton's
plan (which has been endorsed by half a dozen Nobel Laureate
economists).  So, whose numbers should we figure are more credible,
people who have  gotten the Nobel Prize in Economics, or John Haugh
II? 

>Also correct.  It's time to get us a new Congress.  I will be voting for
>the Elephant party this year.  The Jackass party, well, it's a bunch of
>jackasses ...

Hope you enjoy voting for the losers.  Actually, you're half right.  I
wouldn't mind seeing a Republican Congress, just for the change.  But
George Bush has GOT to go.  I voted for him last time, but his record
is just too bad for me to believe that he's going to change now.
Blaming Congress for everything just doesn't wash anymore, and just
because James Baker is now back at the White House putting George in
new pretty packaging isn't sufficient reason for me to believe
anything will be different once his job is out of danger again.

-- 
"Insisting on perfect safety is for people who don't have the balls to live
 in the real world."   -- Mary Shafer, NASA Ames Dryden
------------------------------------------------------------------------------
Fred.McCall@dseg.ti.com - I don't speak for others and they don't speak for me.
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