August 26, 2000
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The use of the phrase 'most economists' in an article by the New York Times about a tax cut is an alarm bell that should tell readers to go into skeptical mode. Here's a classic use of the phrase, taken from a front-page article in this morning's paper about George W. Bush's tax plan. "For the last several years, the economy has been running at or above what most economists consider to be its capacity for noninflationary growth, and by putting more money into the hands of consumers, a tax cut could be expected to further stimulate growth."
This is an interesting sentence for two reasons. The first is that the story seems to buy into this notion of "most economists" that there is a limit on noninflationary growth. In most disciplines, the existence for several years of a reality that contradicts the theory might lead to a reassessment of the theory. If, for instance, the laws of gravity stopped working, you wouldn't expect the Times to blithely report that "For the last several years, objects have not obeyed what most physicists consider to be the laws of gravity." You would expect the physicists to reassess the theory. Yet the reaction of the Times and its "most economists" to several years of strong noninflationary growth is not to reassess the theory that says it is impossible, but to tremble at the possibility that Bush's tax cuts might -- perish the thought! -- actually unleash more growth, thereby causing inflation.
The second reason this sentence is interesting is that it concedes that tax cuts stimulate growth. We'll keep that in mind for the next time the Times editorials and Times columnists such as Paul Krugman use static analysis to claim that a tax cut will increase the deficit. It will be satisfying to be able to cite the Times' own news coverage in asserting that a tax cut "could be expected to further stimulate growth."
Unfortunately, if the Times' coverage is to be believed, the Bush camp is undermining its own case for a tax cut. The article about the Bush tax cut reports: "Mr. Bush's team said the fiscal stimulus would be very modest, and in any case would be far less than the stimulus created by the government spending increases backed by Mr. Gore and President Clinton."
Hello? The Republicans are now claiming that government spending creates more growth than tax cuts? First of all, that claim is probably not true, because private capital is spent more efficiently than government capital. Secondly, if the claim were true, it would undermine the entire rationale for Mr. Bush's economic policies. If Bush's economic advisers really think this, the Gore campaign should try to get one of them to say it in public and then immediately turn it into a television commercial for Mr. Gore.
Apparently, the Bush camp agrees with "most economists" who worry that too much growth could cause inflation. This leads to the comical phenomenon of a Republican presidential campaign actually arguing, with a straight face, that its economic plan is better because it would cause less economic growth than the Democratic plan would, and therefore would put the country in less danger of inflation. Part of the problem here is that Mr. Bush hasn't come out publicly for a gold standard. With hard money, all of this guesswork about the effects of taxes and spending on inflation would cease to exist.
A 'Large' Tax Cut: To get a further measure of where the Times stands on tax cuts, check out a news story in the metro section today. The first paragraph of the story states: "A day after he proposed large tax cuts if elected senator, Representative Rick Lazio today fended off skepticism from Democrats and sought to defend his plan as a way to continue and spread prosperity." Large? The Lazio tax cut is a paltry $776 billion over ten years. That's small compared to George W. Bush's proposed $1.3 trillion tax cut. It's tiny compared to the tax cut Steve Forbes proposed in the Republican presidential primary. And it's miniscule compared to the $4.4 trillion projected federal budget surplus. Only by the crimped standards of Al Gore or Hillary Clinton could the Lazio tax cut be considered "large." Yet the Times, in a news story about the size of the tax cut -- a news story, not an editorial -- comes straight out and describes the tax cut as "large."
Late Again: The Times national section today carries a report on the commotion in Marrietta, Georgia about the posting on the Internet of a list of the names of those who lynched Leo Frank in 1915. This is old news to readers of The Wall Street Journal, which on June 9, 2000 carried a front-page dispatch from Marietta about the controversy. The Times dispatch covers much of the same ground that the Wall Street Journal article did, but doesn't cite it.
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