Earlier I promised to discuss my mixed feelings about Bush's economic plans.  But first let me give you some background on how I think the U.S. economy works.  My thinking has been greatly influenced by Professor John Hoagland at Michigan State University and the following graph of the economy is based upon his research and data provided by the Institute for Supply Management.  The tags are my own.

Economies are complex beyond belief and no one truly understands all of the variables involved.  For example, the impact of stockholder distrust after disasters like Enron are not captured here.  However, Dr. Hoagland has been advocating that disruptions in supply chains are the single biggest factor and have been responsible for virtually all of the recessions in U.S. history (and presumably other nations, but his focus has been the U.S. economy).  He spent decades studying steel strikes in the U.S. and how the resulting supply chain disruptions would cause periodic recessions.  Some points in favor of his theory - 1)  Since long-term steel contracts became available (which minimized both the fluctuations in steel prices and union strikes), the U.S. economy grew for years without a recession.  2)  Based upon his theory, in the late 90s he predicted the Y2k recession.  He thought that since managers (and consumers) were stocking up in 1999 in the fear of computer meltdown, the resulting supply chain disruption would cause a major recession shortly after 2000 - when nothing occurred and businesses and consumers started consuming their stockpiles instead of buying more.  I wish I had known of Dr. Hoagland's prediction earlier, I would have sold all my stock in January 2000...

I've labeled the impact of the Y2k Recession on the graph.  When terrorists struck on 9/11, the resulting disruptions were noticeable in the U.S. economy, but not mortal.  From the graph, it looks like it set back the recovery by a few months.  However, on March 5, 2002, President Bush implemented a Steel Tariff.  This may or may not have been for political reasons, but it was a huge mistake from an economic perspective.  It disrupted the nation's supply chain yet again and made our recovery from the Y2k Recession a slow road.  Since then, I think the Bush administration has been shocked at the impact this has had on the economy.  Once they realized the size of their mistake, they have been passing more and more exemptions to the Steel Tariffs.  After each exemption is passed, the economy starts doing a bit better.

What does this have to do with Bush's proposed tax cuts?  It gives me a predisposition to be skeptical about them.  President Bush has already made one very big economic mistake by implementing the Steel Tariffs - and there is good evidence he did this for political reasons.  I am sure that President Bush and his staff didn't expect the Steel Tariffs to have such an impact, but politicians shouldn't make economic decisions for political reasons.  But we live in the real world and unfortunately, such considerations do impact policy decisions.  So what is good about the proposed tax cuts?  It eliminates several dubious tax policies (such as phasing out the marriage penalty and eliminating the double taxation on corporate profits by eliminating the dividend tax).  It take more money out of the hands of Congress - always a good thing.  It might boost the economy just as Reagan's tax cuts boosted the US economy 20 years ago.  It might.

On the other hand, Congress is increasing spending with the help of both parties.  Pork is flying left and right, Gulf War II will cost tens (or hundreds) of billions even if we use the Iraqi oil to pay for rebuilding Iraq (I do not think we will use any of the Iraqi oil to pay for the invasion, but it would be completely ethical to use their oil revenue to rebuild Iraq).  Except in cases of extreme emergencies (such as defending this country) or opportunity (such as purchasing Alaska) running a national deficit is immoral.  It is stealing from our children to pay for our current wants.  President Clinton finally convinced his party (the liberal tax and spend Democrats) that they would have more money in the long term if they quit running deficits and paid off the national debt.  A "conservative" President Bush gets elected and doesn't appear to care about the deficit.  When did the Democrats and Republicans trade places?  President Bush is gambling that the reduced taxes now will result in major economic growth later.  It may pay off.  I hope so.  But I think it a foolish and unethical gamble.

The "greatest generation" and the baby-boomers got us into this massive debt.  The baby-boomers are going to start retiring soon and expect the younger generations to pay their retirement expenses.  I glady fund the retirement of the WWII generation with my FICA taxes. I am not so charitable with the Baby-Boomers - who will go down in history as the generation that legalized abortion, saying quality of life was more important than life itself. They had better hope successive generations don’t feel that way about euthanasia. While they are still employed, they should pay off the debt for which they are responsible.  As a generation, they voted for politicians who got us into debt.  As a generation, they need to get us out of it.  Anything else is unethical.