"Over the next month President Bush will be traveling across the country selling the American people a tax plan that is very short-sighted. It favors a small, wealthy portion of the American people while contributing to record deficits that will be harmful in the long-run. And it will do so without bringing substantial short term benefits," forecasts former Fed economist and Hamilton College professor Ann Owen.
"The president has formulated an economic plan that does not feature the customary short-run/long-run tradeoffs we so often see in economic policy because the short-run benefits are so small relative to the staggering long-run costs. The systemic changes that he is attempting to make could have long-lasting negative effects on equality of opportunity and income distribution among Americans while hobbling economic growth.
"If the goal of the plan is truly to stimulate the economy in the short-run, temporary, targeted tax cuts and investment incentives are more appropriate. Tax cuts favoring less wealthy households, who are more likely to have far less available cash and credit, will have the most impact on consumer spending in the short run.
"It is disingenuous of the Bush administration to attempt to pass off a dividend tax cut as the solution to the current economic downturn. If the goal of the plan is to eliminate economic distortions to position our economy for sustained growth in the long run, then the administration should focus more on improving access for all to good health care and quality education. As is becoming increasingly apparent in the global economy, an important comparative advantage of the American economy lies in the quality of its human resources. The best way to improve our pool of talent is to give children who are born into poor households an opportunity to succeed."
Economics professor Ann Owen served as an economist for the Federal Reserve Board of Governors before joining Hamilton College. Owen, who earned her doctorate at Brown University, focuses her research primarily on issues related to income distribution and human capital formation.
