Can the World Economy Afford U.S. Tax Cuts?
The International Dollar Standard Redux ON JANUARY 25, 2001, Alan Greenspan, the Chairman of the Board of Governors of the U.S. Federal Reserve System, ended his long-standing opposition to tax cuts–opposition that had been the hallmark of President Bill Clinton’s administration and =0) || (navigator.userAgent.indexOf(“WebTV”) >= 0)) { document.write(”); document.write(”); } //–> the Democratic Party. With the new Republican administration of George W. Bush already heavily committed to tax cuts, and government budgetary surpluses projected to rise into the indefinite future, a strong consensus in favor of sweeping tax cuts suddenly became politically irresistible. Undoubtedly, the sharp decline of GNP growth and the stock market in the United States during the last quarter of 2000 had something to do with Greenspan’s change of heart. And the risk of a sharp cyclical downturn in the near term warrants a short-term Keynesian fiscal response–such as a tax cut–to complement the Fed’s
