Critics of Bush Tax Cut Cite Opposition from Economists, But Many Voice Support Instead

2/11/2003

From: Pete Sepp, Maureen Tell or John Berthoud, 703-683-5700, all of the National Taxpayers Union

ALEXANDRIA, Va., Feb. 11 -- Weeks before yesterday's statement of opposition from economists to President Bush's tax cut plan was made public, other leading members of the economic community -- including three Nobel Laureates -- had come to a very different conclusion. In an open letter organized by the 335,000-member National Taxpayers Union (NTU), 115 economists concluded that "continued sluggishness in the American economy" demanded a "bold tax and budget agenda," one that should include Bush's proposal to end the double-taxation of dividends.

"The labor union-backed Economic Policy Institute and its followers may claim an 'overwhelming response' among economists opposed to the President's tax reductions, but there is no ironclad consensus against such proposals," said NTU President John Berthoud, who holds a Ph.D. in Political Economy from Yale University. "In fact, there is strong support for tax and spending reductions among many prominent economists, including Nobel Laureates."

The joint statement includes 115 of the most prominent economists from academic, business, and research institutions, such as Nobel Laureates Milton Friedman, James Buchanan, and last year's Nobel recipient Vernon Smith. Among their recommendations:

-- Additional Tax Relief. Congress should "enact changes to those tax provisions especially harmful to economic growth. One such idea is to eliminate the current double-taxation on corporate dividends" - which, along with accelerated income tax rate reductions, comprises the bulk of President Bush's tax relief plan. -- Federal Spending Restraint. Many post-September 11 spending hikes "have had nothing to do with terrorism." The "right way to stop federal budget deficits" is to "reduce spending, end programs that have outlived their usefulness, and roll back government's share of Gross Domestic Product." Bush's upcoming budget blueprint will reportedly call for a freeze on at least some federal spending (domestic discretionary programs). -- A Permanent Tax Cut. "Uncertainty makes financial markets wobbly," and the temporary nature of 2001's tax cuts deprives Americans of the "confidence about what tax laws they will be facing in coming years."

"As a rule, government cannot create wealth or expand the economy," the signatories concluded. "Government can, however, hinder economic growth through excessive taxes, high marginal tax rates, over-regulation, or unnecessary spending. Accordingly, elected leaders should be working to adopt measures that curb or halt government policies that are hurting the economy."

NTU is a non-profit, non-partisan organization founded in 1969 to work for lower taxes, less wasteful spending, and accountable government at all levels. NOTE: The full text of the open letter to Congress and a list of signatories are available at http://www.ntu.org.