No one seems to be writing opinion pieces quite the way I would, so I decided to do it myself.

The name? Taverns are places where one goes to discuss the interesting events and things in the world, so this is my tavern.

I will offer my views on politics, economics, and whatever else strikes my fancy.
I will occasionally publish the entire article from another journal for purposes of causing discussion.

 

The New Republic on the Tax Cuts and Economic Stimulus.

Why does Bush keep talking about the tax cuts as economic stimulus? They aren't. Here is the New Republic on the subject.

A CUT ABOVE: One of the most interesting things about the debate over this latest Bush tax cut is that the administration basically admits that a large portion of the package--the repeal of the tax on dividend income--is neither here nor there when it comes to reviving the economy. For example, in his interview with The Wall Street Journal, published yesterday, Treasury Secretary John Snow suggested he'd be willing to settle for a 50 percent reduction of the dividends tax this year, provided the other 50 percent gets phased in over the next decade. It hardly needs pointing out, of course, that a tax cut that's supposedly crucial to reviving the economy today probably isn't going to help much if it's not phased in until 2013.
Of course, apologists for the administration's tax-cutting predilections--namely, the Journal editorial page--are quick to point out that investors are forward-looking creatures, meaning that something like a promised 10-year phase-in of the dividend tax-cut could boost stock prices by 10-15 percent today. For the sake of argument, let's ignore the fact that the 10-15 percent figure is wildly optimistic, since so few companies actually pay dividends, and since the proposed dividend tax cut wouldn't provide much incentive for them to start (since the tax cut accrues to investors rather than corporations). Even then, by the Journal's own admission, the "forward-looking" argument doesn't get you much, since forward-looking people have a nasty habit of worrying that some mean-spirited Democrat will come along and spoil the party before the tax cuts are fully phased in.

Indeed, today's anti-Snow/pro-tax cut Journal editorial tries to make both sides of this argument, reasoning, in effect, that forward-looking people worry about future tax cuts getting revoked, except when they don't. On the one hand, the Journal insists, the administration has to accelerate its marginal income tax rate reductions as quickly as possible, because all those people worried that the tax cuts might eventually get repealed aren't spending their future tax cuts today. But in the very next paragraph the Journal argues that phasing in the dividend tax cut over several years would pack a big economic punch today, since forward-looking investors know that even a Democrat wouldn't dare fink on a dividend tax repeal. Well, which is it?

(To be fair, the Journal does half-heartedly try to square this circle, suggesting that it'd be much harder for a Democrat to reinstate a fully repealed tax cut than some marginal rate cuts. That may or may not be true. But if the dividend tax is scheduled to be repealed over, say, a ten-year period, then any Democrat who got elected in the fall of 2004 would have plenty of time to act before the dividend tax actually was repealed.)

The New Republic
posted by Richard at 3:55 PM