Word: rates
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Dates: during 2000-2000
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...Another reason the Bush tax cut may not have much impact is that its biggest parts, like across-the-board rate reductions, are the ones least likely to sail through a sharply divided Congress. And the pieces that are easiest to pass, like an end to the marriage penalty for joint filers, are too small to do much to stimulate consumer spending. Democrats have accepted the inevitability of some kind of tax reduction?s passing Congress this year. House minority leader Dick Gephardt has already said so. But none of them is prepared to support cuts of the size that...
...view of many economists, interest-rate modifications are better than tax cuts as a way of combating slowdowns, in which case the main weapon of recession fighting would rest with Greenspan. All the same, Bush is hoping that he can get the Fed chairman to signal in some way that he too would agree to a big slice, perhaps during his upcoming testimony before Congress. Greenspan thinks the surplus should be used to pay down the national debt, but he would accept seeing some of it go back as a tax cut before he would allow Congress...
...economic sense of this argument is, well, arguable. Interest-rate cuts take six months or longer to make a real impact on the economy, and Alan Greenspan implements those with a wave of his hand. Bush's tax cut faces a long road through Congress, and of course part of the argument he used during the campaign - back when everybody worried that it would overstimulate a red-hot economy - was that the cuts would be phased in so gradually that no one would notice...
...Greenspan has left Bush a handy platform in the meantime. A growing chorus of economists think Greenspan's last half-point hike in May was overkill, and that the slowdown is indeed happening too fast. The markets are demanding a full point of interest rate cuts from the Fed chairman in the next six months, and many expect him to begin with a surprise, pre-FOMC-meeting cut in the next few weeks, coming perhaps as soon as the next unemployment figures, due out in early January. That would only help Bush set a properly gloomy mood...
...Greeenspan finds himself making emergency rate-cuts this winter to soften the slowdown that he himself started, it may be hard for him to deny an incoming Republican president his pet project, as long as Bush is both sensible and polite about it. After putting Clinton (and himself) in the Fiscal Policy Hall of Fame, though, he's not going to rubber-stamp a tax cut because George Bush's son asks him to, even if young George sends mutual friends to do the asking. Greenspan has a legacy of his own to worry about...