Tuesday, June 28, 2005

Bill Kristol on US Political Economics

Remember Tax Cuts?: "...it's not too soon for the president to start recapturing the Reaganite high ground of tax cuts and economic growth and opportunity. He can do that in two easy and obvious ways.

First, he can make clear that his tax cuts worked. The 2003 cuts in personal income rates, and in the tax rates on dividends and capital gains, have helped produce economic growth of better than 4 percent a year--as non-tax-cutting European economies have stagnated. Unemployment here is down to 5.1 percent, while it remains 10 percent or more in Germany and France. The Dow is up by about 24 percent since May 2003, and capital spending by business is up some 22 percent.

And tax revenues are up. As Stephen Moore has pointed out in the Wall Street Journal, the supply-side Laffer curve has worked. Federal tax receipts are up by over 15 percent so far this fiscal year--and state tax receipts are up 7.5 percent. Individual and corporate receipts are up some 30 percent in the two years since the tax cut. The budget deficit looks as if it will be down by some $60 billion this year.

It's a Bush administration success story. They should tout it. Usually politicians seek to forget--and to have others forget--their failures. In this case, the Bush administration has forgotten to take credit for its successes. Tax cuts have been orphaned. But it's never too late to remind the American people that Republicans pushed through, and the Democrats opposed, tax cuts.

And then the president can ask that the tax cuts be made permanent."

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