Tax Cut Defended

By Hill, Patrice | The Washington Times (Washington, DC), July 25, 2001 | Go to article overview

Tax Cut Defended


Hill, Patrice, The Washington Times (Washington, DC)


Byline: Patrice Hill

Federal Reserve Chairman Alan Greenspan yesterday said this year's "modest" tax cut is having only a limited effect on the economy because it is causing long-term interest rates to stay up even as it boosts consumer spending.

The Fed chairman nevertheless repeated his support for tax cuts in the face of repeated attacks by Democrats on the Senate Banking, Housing and Urban Affairs Committee. He said the government will continue to pay off the $3.75 trillion public debt at a satisfactory pace despite the loss of $1.35 trillion in revenue in the next decade.

"A tax cut was a desirable thing to do," he said, while not endorsing the specifics of the plan President Bush signed into law in May.

On another subject, Mr. Greenspan warned Congress not to be too consoled by the recent sharp drop in energy prices because it is the result of falling demand in the weak U.S. and global economies. He said the nation in particular faces a critical shortage of natural gas when demand picks up again.

Mr. Greenspan's latest, lukewarm endorsement of the tax cuts contrasts with the enthusiastic review they have received from many private economists. Most analysts say the $40 billion of rebates being mailed out this month come at an unusually good time when growth in the economy is hanging by a thread.

Mr. Greenspan rejected arguments by Democrats that the tax cuts threaten to lower productivity and savings and create an inflation problem. But he conceded in questioning that they unexpectedly caused interest rates like the ones on 30-year mortgages to level off this year despite the Fed's aggressive campaign to cut rates.

"Long-term, 30-year mortgage rates have not moved appreciably," although the rates on loans for new cars, adjustable-rate mortgages and other consumer debt have come down in line with the Fed's cuts in short-term rates, he said.

"I think it's basically due to a series of things: one, the tax cut; two, expenditure increases, which were higher than expected; and three, the economy," he said, referring to expectations in the financial markets that Congress will not pay off the debt as quickly and the economy will rebound next year.

"I think it's a marginal issue," Mr. Greenspan added, because long-term rates declined "dramatically" at the end of last year in anticipation of the Fed's rate cuts and have not gone up much since then. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • A full archive of books and articles related to this one
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Tax Cut Defended
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.