DUELING ECONOMIC PLANS….I’ve been pondering the two economic proposals on offer lately, and speaking from a nonpartisan point of view I have a question: Do we really even need a big economic plan right now?
On the Republican side, we get a big tax cut, but let’s face it: overall tax levels aren’t really very high right now, either historically or in comparison to other developed countries. Unless you simply believe that taxes should always be cut no matter what, it’s hard to see the point. What’s more, the effect of a dividend tax cut is supposed to be a boost to the stock market, but to my eye the stock market looks like it might still be overvalued, and artificially keeping it high doesn’t seem to make much sense. Better to just let it drop to its natural level.
On the Democratic side, we’ve got a bunch of proposals that are supposed to provide a short term stimulus to the economy. It’s true that job growth was poor last year, but even so unemployment is only at about 6% and the economy grew by around 3% in 2002. I don’t have a problem with, say, extending unemployment benefits, but otherwise this is hardly the kind of deep recession that cries out for a Keynesian stimulus.
I can’t help but wonder if the best option is really (c) none of the above.