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Our staff of freelance writers includes over 120 experts proficient in Economic Stimulants, therefore you can rest assured that your assignment will be handled by only top rated specialists. Order your Economic Stimulants paper at affordable prices ! George Bernard Shaw once mused that "If all economists were laid end to end, they would not reach a conclusion." In seeming defiance, Robert L. Bartley asserts his deductions plainly "Permanent, Marginal, Immediate" (Bartley, A15). In his article of the same title, Bartley addresses the deceivingly simple question of "what stimulates and why?" en route to theoretically solving the problem of reducing the budget deficit that currently plagues our country's politicians. And though he does indeed arrive at several insightful and valid conclusions, he does so with a slightly negligent treatment of monetary policy and a certainty that seems to discount the ever-haunting unpredictables that seem inherently entwined with the economic question.
The first thrust of his three-pronged argument is simple the tax cut�if it is to be successful in stimulating a growth in the economy and consequently in tax revenues�must be permanent. It is only logical to assume that mere tax rebates, for their temporary nature, will not be regarded as valid stimuli for increased spending. Consider the 001 tax cuts mentioned briefly in the article that President Bush now plans to extend to permanence. In striving to make these cuts permanent, Bush is hoping to avoid a situation similar to that of the failed 175 tax rebates�which were intended to boost consumer spending in the midst of a recession, but were rather tucked away as savings by consumers who were never enticed by the prospect of long term tax reductions that could be of any significant economic benefit. The problem with a permanent tax cut that proves unsuccessful in stimulating growth is that it then results in a gradual growth of the deficit that can only be stopped by the discontinuation of the cut that might damage the rapport of the government's fiscal policy with the people. In the process, the increase in the debt would also cause a rise in the interest rate with damaging effects that could only further stifle economic growth. Questioning the term "permanent" may also prove damaging to Bartley's argument, as it must be accepted that with each election, the government�and its economic policies�are subject to change.
Bartley goes on to affirm the effectiveness of cutting marginal rates as a stimulus for an economic boost and a drop in the deficit, perhaps the most easily admitted point of his argument. This operates under the assumption that a tax cut, which is by definition an expansionary fiscal policy, will cause an increase in government revenues by augmenting savings, investment, and consumer spending through a boost in disposable income and an increase in rewards for such economic activity. Though this seems sound in theory, experience with supply-side economics�and scrutiny of the effects of such policy moves on the aggregate supply and demand schedules�prompts the labeling of such policies as risky. The Reagan era of economic policy, which is synonymous with supply-side theory, is certainly evidence of this notion. Moreover, the effectiveness of the cuts as incentives for savings and investment is questionable. Such savings incentives�which have been know to be unproductive, regressive, and unnecessary (as that saving might have been done regardless)�will logically increase the deficit. Similarly, investment incentives�which easily "distort patterns of investment"�can waste money that could otherwise go towards a boost in government revenue.
Bartley's argument for the immediacy of such cuts may be more sensible and resonates the simple notion that for effects to be immediate, the stimulus must be the same. Though this seems an easy enough contention, it wishfully discounts the multitude of holdups that could impede the immediacy of these policies. Conventionally, it is agreed that dealings in fiscal policy, such as the cuts proposed by Bush and Bartley, advance aggregate demand more rapidly than those actions in the realm of monetary policy. Nevertheless, it is also known that fiscal policy is often hindered by the many policy delays that are inbuilt in the structure of our government. Thus, the effects of the cuts may not be as immediate as Bartley or the American people would hope, resulting in the loss of some of the cuts' economically stimulating fruitions.
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Despite the various uncertainties that must be addressed in any economic proposal, one can somewhat concur with Bartley's contentions. The greatest reservation one might take with his proposed ideas is his disregard for any discussion of monetary policy, which is significant for two reasons first, that the effectiveness of any fiscal policy also depends highly on the condition of our country's monetary policy; and second, that there may exist tactics in the domain of monetary policy that may more effectively stimulate economic growth and boost government revenues. For example, consider the fact that expansionary fiscal policy can cause inflation in shifting the aggregate demand curve outward, a problem that may be remedied or better handled by a manipulation of monetary policies. In short, though Bartley's assertions are for the most part sensible, there are numerous problems and, as was just discussed, omissions that merit some greater scrutiny.
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