Nobel winners pan Bush tax cuts
February 8, 2003 3:05am
TEN Nobel Prize-winning economists are poised to lambast President Bush's tax-cutting plans in the latest rebellion against his fiscal policies.
On Monday, a week after the President revealed a budget based on military spending and tax reductions, some of the world's leading economists will argue that his strategy risks plunging America into recession.
The Nobel laureates include the former World Bank economist Joseph Stiglitz, Lawrence Klein, Franco Modigliani, and William Sharpe.
Another 400 top US economists, most of them academics, have also signed a statement saying the tax cuts will lead to chronic deficits and little growth.
The contentious part of Mr Bush's $670 billion ( pounds 410 billion) 10-year tax cut is the ending of taxation on share dividends, an initiative aimed at bolstering the stock market.
The Economic Policy Institute, the think-tank leading Monday's assault, said in a note yesterday: "Over-capacity, corporate scandals and uncertainty have and will continue to weigh down the economy. The tax-cut plan proposed by President Bush is not the answer to these problems.
"Regardless of how one views the specifics of the Bush plan, there is wide agreement that its purpose is a permanent change in the tax structure and not the creation of jobs and growth in the near term," the note said.
President Bush defended his scheme again yesterday on behalf of "the 10m seniors who receive dividend income".
His attempt to paint opponents as "class warriors" has not been entirely successful, however, and he faces scepticism from some unlikely quarters including senior Republicans.
The latest government figures show that America's economic growth stalled to just 0.7pc in the three months to Christmas. For the whole of 2002, the US grew at 2.4pc - slower than it has come to expect but better than other large economies.
At a projected $304 billion, the budget deficit this year will be the biggest ever in dollar terms, though it accounts for only 3pc of the whole economy. "The best way to deal with deficits is to encourage economic growth," the President said yesterday.
The 1.6m jobs lost in the past two years are seen as a more serious threat to Mr Bush's re-election chances. Jobless figures yesterday showed a slight fall in unemployment to 5.7pc.
Publication: The Daily Telegraph
Distributed by Financial Times Information Limited
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