At a time when the economy is at virtually zero growth, that would be a welcome improvement. Third, the tax relief must be conspicuous. The more transparent the tax cut, the more positive effect it will have on consumer confidence. Finally, the tax relief must be directed at those who will spend it. Two-thirds of the Nation's economic output is based on consumer spending.
Recessions are largely a result of a letup in that consumer demand.
Any tax cut that claims to provide an economic stimulus must be measured against these four standards. When scrutinized this way, both the President's proposal and the plan which was reported last week by the House Ways and Means Committee, and may, in fact, be voted on by the full House as early as tomorrow, display significant weaknesses. That leaves precious few resources for other important initiatives like desperately needed prescription drugs for our seniors, modernization of our armed forces, improving our schools. No funds would be left to add to the debt reduction that can come through the application of the surpluses coming into Social Security and Medicaid. The Ways and Means proposal is a more expensive down-payment of the Bush plan in that its implementation is pushed forward by a year.