If the CNN account of what George Bush said today is correct, he misses two important points about what would be the best fiscal stimulus package. The title says Bush called for “broad-based tax relief”. No surprise that he’d call for tax cuts and not spending increased but isn’t broad-based the opposite of targeted? And then there is:
The package must be big enough to make a difference in an economy as large as ours
Worrying about the size of the tax cut rather than its impact on aggregate demand strikes me as ignoring the principle that we should get the most bang for the buck. CNN also states that did not offer specifics yet – so I guess the devil will be in the details.
Then again, let’s have Bush speak for himself:
As Congress considers such a plan, there are certain principles that must guide its deliberations: This growth package must be big enough to make a difference in an economy as large and dynamic as ours – which means it should be about 1 percent of GDP. This growth package must be built on broad-based tax relief that will directly affect economic growth – and not the kind of spending projects that would have little immediate impact on our economy. This growth package must be temporary and take effect right away – so we can get help to our economy when it needs it most. And this growth package must not include any tax increases.
I guess CNN did get it right. Add to this the stupid comment made about why higher government spending should be off the table. Why are we ruled by such idiots!