Everyone associates the Reagan years with great memories, but my students associate the name Reagan with deficits and increases in government expenditures. We've worked so hard and so long to get the deficit under control, and we do not want to do anything that could endanger that. With an expanding economy, government expenditures automatically fall because there is less going to welfare benefits and unemployment, and taxes rise because there are more tax receipts due to more income. You have to remember that everything is not equal here. With the economy slowing down right now, we are going into a situation where we are going to have more unemployment and welfare benefits being paid out, and of course, less tax revenue because people are making less money.
Some people even believe there is the potential for a recession.
First, policy lags may be quite long. Even though tax cuts have been the linchpin of Bush's economic policy, I am just not as excited about it as many people are. That's the bottom line. Third, there is considerable uncertainty as to the direction of our economy. Also, economists are far from unanimous on the economic impact of the proposed rebates.