>
> On Tue, 25 Jul 2000, Daniel Davies wrote:
>
> > PS: regarding the new economy and its affect of the US trade balance;
> > I said it seemed unlikely to me
>
> It seems the most likely, if somewhat inadvertant savior (of the US
> economy from the burden of current account and savings adjustment) now on
> the horizon is Bush's 1.3 trillion dollar tax cut, which would drastically
> reduce the budget surpluses at roughly the right time to smooth the
> transition.
I assume this would be a regressive adjustment in the tax base. I have often heard that the US budget surplus was, in part, a result of a change in taxation during the mid-1990s, capturing a significant part of the stock market gains. Is this true?
Secondly, how would a tax cut correct the savings rate? Do you mean that a cut in taxation would allow people to put money which was previously spent on taxes into savings? Wouldn't any surplus money being added to the pot at present just fuel further recklessness?
Peter -- Peter van Heusden <pvh at egenetics.com> NOTE: I do not speak for my employer, Electric Genetics "Criticism has torn up the imaginary flowers from the chain not so that man shall wear the unadorned, bleak chain but so that he will shake off the chain and pluck the living flower." - Karl Marx, 1844