From Low to High
Wesbury, Brian S.
"From Low to High" BY BRIAN S. WESBURY Election Day 2002 was the height so far of George Bush's presidency, the bottom was in mid-July, during a speech in Birmingham, Alabama, when he addressed...
...it moves us closer to a flat tax where all income is only taxed once...
...Take the giddy GOP talk about Arnold Schwarzenegger as a potential Republican candidate in the Golden State...
...Ending their double-taxation—by allowing individuals to receive dividends tax-free—would be a simultaneous political and economic coup, much like the Clinton housing tax cuts...
...Similarly, if you asked most business people about what happened in the late 1990s, they would say their companies profited for a simple reason: hard work...
...Those entrepreneurs who worked so hard to build all that wealth in the late 1990s deserve respect...
...So a push for accelerated phase-in has the best risk-reward balance of all potential economic legislation...
...By making mortgages parents turned to the bank for financing, the bank easier to get, we helped three million families buy or turned to Freddie Mac...
...The same is true of most workers, who also saw their incomes rise rapidly...
...Only the day before Cheney spoke, his boss had officially signed "Trade Promotion Authority...
...For details, visit freddiemac.com...
...At least not in any meaningful sense...
...I.THE SQUIRMINATOR Things we don't need: a Kennedy Republican BY GEORGE NEUMAYR Perhaps nothing reveals the California GOP's troubles more clearly than the gimmicks proposed to erase them...
...Thank-fully, this time the White House did not forget the lesson...
...And for good reason: 99 percent of all American businessmen and women are ethical, hard-working...
...Nonetheless, it is inexorably changing the political landscape, and on Election Day it took two steps forward...
...To have the president suggest that all this was a mirage—including the very real economic numbers that back it up—was a slap in the face...
...They know crime does not pay—not where competition exists...
...Its meaning was clear: rank-and-file Republicans in California do not George Neumayr is a writer in southern California...
...Free markets may not erase sin, but they hold it in check better than governments can ever hope to...
...They know integrity is important...
...And he asked that homeland security efforts be free of the Democratic-favored morass of bureaucratic and union handcuffs...
...Paradoxically, when investors know that taxes will be cut in future years, they hold off on decisions today...
...Newt was going to "stand on a rock" and wait until the Clinton White House came to him...
...Micromanagement and economic engineering failed...
...In my former life as a chief economist for the Joint Economic Commit-tee of Congress in the mid-1990s, I recall with clarity a strategy meeting with a top RNC official making the rounds on Capitol Hill...
...THE AGENDA With this historical guide as a reference, the agenda for an investor class-friendly White House is clear...
...More importantly, the administration has notified Congress of its intentions to begin negotiating a new South Africa Free Trade and Development Agreement...
...A big back yard...
...With Don Nickles taking over the Budget Committee, there is a chance to move forward on dynamic scoring—the key to truly understanding the stimulant effects of tax cutting—and also on new budget rules that will make reform easier...
...Vice President Dick Cheney got it right in early August when he said in a major economic speech that "high and unpredictable energy prices, a steadily rising tax burden, and high interest rates" caused the recession...
...Brian S. Wesbury is chief economist at Griffin, Kubik, Stephens & Thompson, a Chicago-based investment bank...
...Democrats already supported the cut once, and the economy surely needs help...
...A package of investor tax cuts would do the same for the equity market...
...18 THE AMERICAN SPECTATOR • NOVEMBER/DECEMBER 2002...
...But swinging for the fences can lead to strike-outs...
...Will such desperate superficiality solve the party's malaise...
...They were not "on a binge...
...Not only did we buy their refinance their homes last year...
...The best way to cure this economic hangover is to help the party start all over...
...The president should not try to change the world in the lame-duck session of Congress...
...Deficits, in Gingrich's mind, were the number-one enemy of capitalism and if fighting them required a shutdown of the government, then so be it...
...And the stock market rallied, after falling consistently ever since tariffs were slapped on imported steel back in March...
...Then the top issues should be making last year's tax cuts permanent—and even more important, building a solid case for helping the economy now by accelerating the longer-term cuts into 2003...
...The focus on deficits and Newt's hubris were mistakes...
...Whole-sale tax reform and private-account Social Security makes sense and would be home runs...
...Pete and Eddie, it was a dream come true...
...Everywhere President Bush went during his final seventy-two-hour blitzkrieg before the election he called for his tax cut to be permanent...
...Stocks fell sharply during the speech...
...FRom Low To HIGH BY BRIAN S. WESBURY J f Election Day 2002 was the height so far of George Bush's presidency, the bottom was in mid-July, during a speech in Birmingham, Alabama, when he addressed the issues of accounting fraud and corporate governance...
...They felt that blood, sweat, and tears, along with the innovative use of technology, had increased productivity, profits, and incomes...
...Energy policy, prescription drugs, and the minimum wage will also be on the agenda—every one an opportunity for the Bush administration to show the investor class the power of competition and self-reliance...
...The market headed right back down to new lows...
...But when the new Congress convenes in 2003, things will change...
...He campaigned hard for terrorism insurance and homeland security, and those items should come first...
...Karl Rove and the president need to learn from that episode and understand the difficult job that lies ahead: move to support the investor class, but don't use slash and burn tactics to get it done...
...recession was misguided policy, not corruption...
...America must get rid of the hangover that we now have as a result of the economic binge we just went through," he said...
...Let's watch the Congressional Black Caucus wrestle with that one...
...Unfortunately for Newt, Bill Clinton knocked him off that rock, picked it up, and dropped it on him...
...A state party fallen low enough to champion Schwarzenegger as its savior clearly needs one...
...For a populist president, this fall off the libertarian wagon into a Democratic-Keynesian "government knows best" abyss was appalling...
...Every new piece of legislation should be put through a litmus test does it move us toward tax simplification or away...
...It also knows that George Bush is not responsible for the recession or the stock market crash...
...As the boomer generation ages, dividends loom larger in financial planning...
...WATCH THAT ROCK J n the first few days of his honey-moon, George Bush played it safe...
...The good news is that the electorate does not want to turn back to Big Government...
...Better to wait for a second term...
...No, but it does help illustrate and explain it...
...Unwisely, the administration backed off on the tax cuts in early September, after getting resistance from Congress...
...Since 1997, when President Clinton signed a capital-gains tax cut that made homes the least-taxed investment, the housing market has set record after record...
...The boom of the 1990s was not a "binge," and only in the inside-out world of Lord Keynes do good times inevitably end in a crash...
...The investor class knows that higher taxes and bigger government are bad for the economy...
...For weeks to just minutes so they could move in sooner...
...Politicians who follow its lead will not only win more elections than they lose, they will—as President Bush is poised to do today—help lead the United States back to world-beating economic growth...
...And baby boomer parents had homes to sell, so it helped politically too...
...Like Richard Riordan, he is a Republican in name only—Hollywood's idea of a good Republican standard-bearer, but not what rankand-file Republicans seek...
...But the real cause of the latest U.S...
...While some conservatives want to move quickly on a major overhaul of the tax system and private accounts for Social Security, the White House isrightly—taking one step at a time...
...A week later, news out of the Waco Economic Summit had the White House supporting investor-friendly tax cuts...
...That's how we're creating mortgage, we helped cut their approval process from a nation of homeowners...
...And this is key in today's political world...
...The Republican resurgence and the growth in the investor class are The best way to cure this economic hangover is to start the party all over...
...In addition to tax cuts, the White House needs to move rapidly on free-trade initiatives...
...Freddie Mac We Open Doors ©2002 Freddie Mac www.freddiemac.com one and the same...
...free markets and the European social welfare state would make for a great worldwide debate about what economic system works best...
...The best way todescribe its momentum is "two steps forward and one step back...
...He also called for passage of his terrorism insurance bill, to help lower costs for construction projects...
...Newt wasn't going to move from that "rock" until the world understood he was king...
...Clearly there were some "bad apples" at work...
...This was a turning point for the Bush administration and in my opinion greatly helped Republicans in the midterm elections...
...The contrast between U.S...
...He was explaining how Newt Gingrich was going to use his national mandate to hold Bill Clinton hostage on the budget issue...
...The electorate gave George W. Bush real power this November, and they want to see how he uses it...
...When their Some people just can't wait...
...Lower taxes, a more orderly insurance market, a coordinated, nonbureaucratic effort to make our country safe—all clearly beneficial developments for investors...
...A further capital-gains tax cut, while politically costly initially, would cause an equity market blast-off...
...For evidence that tax cuts work, look at the strength in the housing market...
...And how about asking Ireland, the U.K., New Zealand, and Australia to join NAFTA...
...A playroom...
...That is why ending the taxation of dividends at the individual level would be better than ending it at the corporate level...
...If you overprice, pro-vide shoddy merchandise, or cheat and steal, you will either be found out or you will lose out to your competitors...
...Otherwise sensible people made fun of our first MBA president...
...Building this base for major reforms is absolutely essential...
...The reason is simple: the most potent political force in America is the investor class...
...That may be a worthwhile risk...
...Bush's trade czar Robert Zoellick has promised agreements with Chile and Singapore by the end of 2002...
...If he works on enacting those parts of his agenda that both create economic growth and build political capital, he will win in 2004...
...Schwarzenegger, for all his charm and charisma, can't redeem the California Republican Party, for the simple reason that he is not a Republican...
...16 THE AMERICAN SPECTATOR • NOVEMBER/DECEMBER 2002 Separate bedrooms...
...Have the party sages learned nothing from Riordan's disastrous primary run...
...This 80-million member group is not as consistent as many would like...
...Good old-fashioned, Texas-style entrepreneurial zeal has worked...
...In the short term, Bush's staggered 2001 tax cuts actually hurt the economy...
Vol. 35 • November 2002 • No. 6
