Word: offsets
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...poor, claim Pechman and others, will be hurt since their benefits from the tax cut may be more than offset by cutbacks in funding for social programs that are incorporated in the budget portion of Reagan's agenda. Last week the Joint Committee on Taxation noted that about 35% of the total dollars in tax cuts will go to 5.6% of the people, those making $50,000 or more a year, while 31.7 million taxpayers earning $15,000 or less will get only 8.5% of the 1982 cut. The Administration's reply is that only those who earn...
Rich or poor, most Americans will not find themselves much further ahead if those income tax cuts are offset by scheduled rises in Social Security taxes and the inflationary creep of wages to higher tax brackets. That is the view of Lacy Hunt, economist for the Fidelity Bank of Philadelphia, who calculates that such raises will total 21% during the next three years, all but wiping out the 25% cut (which would, however, save wage earners from being that much further behind...
...offset lactor of people having more money in their packets to give is not a very powerful effect--not even worth mentioning." Auerbach said...
Thurow's worries are challenged by Herbert Stein, a chairman of the Council of Economic Advisers under President Nixon. Defense expenditures, Stein argues, will be partly offset by Reagan's deep cuts in social spending. Income tax reductions will prompt enough saving and investment to spur productivity growth. In any case, Stein and like-minded economists point out, even in fiscal 1986, at the end of Reagan's planned military buildup, defense outlays will consume only about 7% of the gross national product?no more than in the late 1950s and early 1960s, when the U.S. enjoyed noninflationary prosperity...
...Federal Reserve Chairman Paul Volcker's tight-money tactic, which they generally support, but the lack of an equally resolute stance on fiscal policy. Some bankers and analysts fear that the President's tax cut plans, plus his projected defense spending buildup, will more than offset the Administration's deep spending cuts elsewhere in the budget, and thus increase the need for federal borrowing. Interest-rate pessimists like investment bank Economists Henry Kaufman of Salomon Bros, and Albert Wojnilower of First Boston Corp., who have been nicknamed Dr. Doom and Dr. Gloom along Wall Street, assert that...