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[Shape Shifter]

Originally posted by Spanky
The simplistic statment that growth is good and is what you are looking for is not wrong. If you cut the taxes there is no way that the effects will probably kick in the first year. So it will take a while for you to increase to the 5%. In addition, the point you are leaving out is the deficit or spending. If you cut spending, and you cut spending on transportation and education (or law enforcement), then you will decrease growth. If you don't cut spending, but increase the deficit then there will be crowding out. The government will borrow a lot of money to pay the deficit, and that money won't be available to investors for buying factorys and such. That will also decrease growth.

Some tax cuts don't encourage growth. If you cut the capital gains tax, that won't stimulate the economy (in my opinion). So the key is to cut taxes in such a way to stimulate growth, but at the same time not hamper government programs that help growth and not increase the deficit to the extent that it will hurt growth (or that it will hamper growth more than the tax cut growth brings in).

But in the end if you can cut taxes and sustain five percent growth for a long period of time it will be worth it. Growth means everyone will be wealthier, you will have more revenue for schools and infrastructure and you can have lower tax rates.

So over the long run you do whatever you can to maximise growth. You avoid deficits not to be fiscally prudent, but because deficits hamper growth. Everything is done to maximise growth.

What does any of this have to do with the Bush tax cuts?