On Tue, 25 Jul 2000, Peter van Heusden wrote:
> I assume this would be a regressive adjustment in the tax base.
Undoubtedly, if current Republican tax cut proposals are anything to go by. And anything else they've ever done.
> Secondly, how would a tax cut correct the savings rate?
I'm sorry, I was referring to the Godley Wynne article referenced earlier on the problems facing the US economy ("What Happens If They Start Saving Again?" London Review of Books: http://www.lrb.co.uk/v22/n13/godl2213.htm) There he points out that people in the US are spending more than they make ("negative savings"), and since this can't go on forever, it won't. But, he argues, it is precisely this negative savings, along with the negative current account balance (another thing that can't go on forever) that together are fueling the economy, and so when they stop, so will the economy. However, he adds at the end, theoretically at least, the fall in demand could made up if the US drastically changed its fiscal stance-- if we stopped running huge surpluses. Which this tax cut would theoretically accomplish, although of course probably in all the most inegalitarian and wasteful of ways.
So I wasn't saying the tax cut would correct the savings rate. I was saying it would smooth out the contractionary effects of the increase in savings that arguably has to happen sometime. If anything obeys any laws any more, of course.
Sorry to have put that so obscurely.
Michael
__________________________________________________________________________ Michael Pollak................New York City..............mpollak at panix.com