Letter - Tax cuts will make economy stronger

Thursday, May 15, 2003

To the editor:

Tax cuts will make economy stronger

Washingtonians, economists and even a smattering of Wall Streeters have taken leave of their senses when it comes to financing the Iraq war and that country's rehabilitation. The war itself may cost more than $100 billion, they wail. Postwar bills may add another $100 billion to $200 billion to that.

"Under these circumstances tax cuts would be irresponsible!" they cry.

Pass the smelling salts to these fiscal hypochondriacs. Then give them some remedial education. The immediate war costs will come to about 1 percent of GDP. That's less than 1/100 of the proportionate costs of World War II, which we smoothly financed with 2.5 percent bonds. It's 1/15 of the war in Korea, and 1/12 of the war in Vietnam.

Our national debt today is a little more than one-third of GDP, which proportionately is significantly less than that of any other major nation.

Cutting tax rates? Here the Chicken Littles turn into Daffy Ducks. Tax-rate reductions always lead to a stronger economy. To oppose them because the economy is weak is like telling a pneumonia patient to avoid antibiotics until he recovers. These worriers share one of the least attractive traits of certain CEOs today: a myopic focus on the short term.

Short term, we have deficits and war costs to deal with. Tax cuts will, in the long term, mean a more robust economy, better jobs, an improving quality of life and more government revenue. Tax-cut opponents thus flunk three courses: history, logic and math.

Steve Forbes

Forbes Magazine

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