No Good-Time Early Out

Here is a good Post to explain the Options available to Federal policy, both the Reserve and Congressional stimulus action. Cactus may have the most efficient plan, which is to do nothing. PGL critiques a program which would reduce Consumption Demand, when there is already a decline in Investment Demand. One Salient Oversight advocates an Austerity program of high Interest rates and raising Taxes. I happen to agree with the assessment, but must say that the Author loses me in the pontificating of the policy. This is the manner in which I would approach the Problem.

Congress should enact the 1993 Tax law once more, and nothing else; nullifying all Tax concessions granted in the interim period. I suppose I should present some rationale for such a Policy, though I played hokey this morning, and decided I preferred the practice. Anyway, here is an attempt at a serious defense of my policy. The first Item states that We already have evidence that modern Business formations can navigate such taxation, and quite successfully. The second Item states that reversion to this earlier successful Tax policy will negate whatever misguided fiscal and economic initiatives have been adopted in the interim period. There is primary evidence available that this impact of Taxation could not reduce Employment below 2005 levels, a magnitude which could at most lose about 2.3 million Jobs; but the previous transition in 1993 expressed an eventual Gain in Employment, due to Business preoccupation with recouping lost revenues to Taxation. The rise in Tax revenues would aid in provision of welfare services associated with a Recession if it comes, and help to reduce federal debt levels if no real Recession occurs (my estimate of the likely Outcome).

The only trouble We ever had with the Tax policy of the early Clinton years consisted of attempts to streamline it to promote Business. I have previously stated that Capital aggregation was redundant with the advent of the modern Banking system. Claims that it is necessary for Investment is false, even at the Corporate level; early success in the Economy simply turned to Rent-seeking through adverse lobbying efforts, eventually distorting the impact on the Tax base. Changes are on the Wind, and We need an adequate Tax policy to channel those Changes. Labor Participation will have to rise within 7 years, and Wages will inevitably regain position in the Income format. The Dollar will have to stabilize, else Americans will lose their position as prime Trading partners; this can only be accomplished with relatively active repayment of Our foreign debt obligations. Too many Economists fail to recognize that the Austerity program is already with Us, and We need an effective Tax policy to cancel the agony of that fact. lgl