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Go ahead, cut away. (Scan).(tax cuts in the United States)(Brief Article)
Critics are saying that President Bush's tax cut proposal is misguided. It will lead, they say, to bigger deficits--which in turn will raise interest rates.
But the economic record is clear: Larger budget deficits do not, by themselves, raise interest rates. Perhaps the closest analogy to where we stand now is 1981. The Reagan administration had passed big tax cuts equal to nearly 2 percent of GDP, while simultaneously increasing military outlays, and over the next five years the federal budget deficit rose from 2.5 percent of GDP to 5.3 percent. Yet long-term interest rates tumbled during that same period--from nearly 14 percent to 7 percent.
The truth is, tax cuts that bring deficit increases equal to 1 or 2 percent of GDP have no discernible impact on interest rates, because U.S. bond markets are huge. The sum of ...
- Americans sharply reduced spending during June; Fewer tax cuts, rising interest...
- Newspaper article from: The Washington Times July 15, 2004 700+ words
...prices, waning tax cuts, sparse auto incentives and rising interest rates took a toll on...tax rates and interest rates engineered by...stubbornly high, tax cuts are diminishing, and the lowest interest rates in 40 years are...
- What will 2002 bring? Decline in sales; Blow will be softened by lower energy...
- Magazine article from: Automotive News Henry, Jim December 17, 2001 700+ words
...on oil prices.'' * Tax cuts. Taxpayers got a refund...history.'' * Low interest rates. The Federal Reserve cut short-term interest rates an unprecedented 11...Anybody who thinks interest rates are not important has...
- United States: the consumer is still king: low interest rates and tax cuts...
- Magazine article from: What Investment Root, Keiron December 1, 2002 700+ words
...benefited from a cash injection through tax cuts and lower interest rates. This year, lower interest rates have fed through into mortgage re...by a huge refinancing of property. Interest rates recently dipped below their 1998 post...
- Deficit-financed tax cuts and interest rates.(influence of federal budget...
- Magazine article from: Business Review (Federal Reserve Bank of Philadelphia) Leduc, Sylvain June 22, 2004 700+ words
...will translate into higher long-term interest rates and a lower level of income. In this...which budget deficits lead to higher interest rates. He also surveys empirical studies...associated with higher real long-term interest rates. In 2001 and 2003, the Bush administration...
- U.S. middle-class tax cuts could hike long-term interest rates. (Originated...
- Newspaper article from: Knight Ridder/Tribune News Service Kean, Edward October 19, 1994 700+ words
...warned that long-term interest rates could rise 1.5 to...raise short-term interest rates more aggressively...hold down long-term interest rates. Any perceived retreat...1995, even without tax cuts, to curb inflation...
- Economic picture brightens; Sectors finally respond to low interest rates, tax...
- Newspaper article from: Star Tribune (Minneapolis, MN) Blahnik, Mike May 7, 2004 700+ words
...even though they have yet to put pressure on interest rates. Among Thursday's reports: - State initial...should, given the 46-year low in short-term interest rates and tax cuts meant to encourage consumption and business investment...
- How tax cuts will, and won't, aid economy: Impact from lower interest rates and...
- Newspaper article from: The Christian Science Monitor February 8, 2001 700+ words
...fact, while falling interest rates and rising expectations...Last month, it cut interest rates twice, switching from...The Fed had to reduce interest rates more than 5 percentage...inflation to recur." Tax cuts as growth engine The...
- UK Leaves Interest Rates Unchaged, Awaits Tax Cuts
- Newspaper article from: Xinhua English Newswire November 1, 1995 700+ words
...3.8 percent in the first two quarters. But economists believe that Clarke would be more favorable to politically popular tax cuts rather than an interest rate cut. Clarke will unveil the government's annual budget, the most important document on overall...
