January 10, 2003
BUSH ECONOMIC PLAN PRAISED, PANNED
KEY FINDINGS
** Conservative outlets
praise structural reforms and tax cuts in the Bush plan, while leftist outlets
claim only the rich will benefit.
** Many see little
short-term stimulus and worry about U.S. budget deficits.
** Observers link the
plan's economic objectives to Bush's reelection plans and determination not to
repeat "his father's mistakes."
MAJOR THEMES
'An ambitious plan to boost the economy'-- Rightist and financial dailies hailed Bush's
"ambitious and necessary" economic package. Germany's Frankfurter Allgemeine
termed cutting taxes on stock dividends "long overdue" while
Britain's Financial Times commented "ending double taxation is to
be applauded." The Australian
Financial Review said the plan was "on the money" while a Hong
Kong paper added the plan should "benefit the global economy." Some liberal outlets found merit in the plan,
too: Montreal's French-language Le Devoir held that it "will
certainly engender positive results by inciting Americans to invest" while
London's liberal Guardian, usually reliably anti-Bush, called the
package "a courageous adventure in Keynesian supply-side economics...at a
time of great economic uncertainty."
Critics focus on 'social inequality' of tax cuts-- The Guardian went on to complain, as did
many liberal and leftist papers, that "most of the supply is being piped
directly to the rich." A leftist
Italian daily dubbed the plan "pure Reaganism," while others doubted
it would be "economically effective" or "socially
fair." Spain's independent El
Mundo described the proposal as "a big benefit for the most
rich...disguised as an economic stimulus," while a Belgian writer
complained that "the poor will drink their cup to the last
drop." The liberal Sydney
Morning Herald claimed "many Americans will be left out in the
cold." Others fretted that the plan
"will provide little short-term fiscal stimulus" and "have
little impact" before 2004.
Concerns about ballooning deficits and the cost of war in
Iraq-- Many writers who backed
the plan's general thrust called its financing "the weak point" and
worried about "further deterioration" in the deficit outlook,
particularly "on the eve of a costly war against Iraq." A Canadian commentator, though giving the
plan an 'A' for "sound tax policy," conceded that "expensive tax
cuts are a risky business" in the face of projected USG budget deficits. France's right-of-center Le Figaro
worried that "the slightest hitch...could bring on a new recession."
Plan 'anticipates' 2004 electoral contest-- Writers across the ideological and geographical
spectrum connected the plan to the 2004 presidential elections. A Spanish daily said Bush is
"obsessed" with his father's "bitter defeat" in 1992. He knows, another writer commented, that a
weak economy is "his political Achilles heel." The conservative Australian declared
that Bush "has learnt from his father" and that "this is an
intensely political package."
EDITOR: Steven Wangsness
EDITOR'S NOTE: This
analysis is based on 40 reports from 20 countries Jan. 7-10. Editorial excerpts from each country are
listed from the most recent date.
EUROPE
BRITAIN: "President
Feelgood"
The liberal Guardian published this view
(1/9): "The good news about George
Bush's package of accelerated tax cuts is that it is a courageous adventure in
Keynesian supply-side economics to boost spending at a time of great economic
uncertainty. The bad news is that most
of the supply is being piped directly to the rich. The man who said he would govern for all
Americans has decided that this will be done by feeding dollar bills to the
very rich, in the hope that they will trickle down to the poor. But on present evidence they will not even
drizzle down. Half of the president's
package consists of the abolition of the tax on dividends.... In a democracy in which two-thirds of people
own shares this may sound fair. The
trouble is that poorer people own their shares through the equivalent of
pension funds whose dividends are already free of tax--so the benefit will be
creamed off by the rich."
"The White House Strays From The Truth"
Gerard Baker, writing in the independent Financial Times
held (1/9): "When it comes to honesty,
whether in the field of economics or diplomacy, the president and his team have
evidently decided to take the conscience-free approach.... We face a disturbing and historic
juxtaposition of economic and political forces.... We are at a historically critical moment for
the U.S. and the global economy....
Where we need clarity, the leadership in Washington is providing
obfuscated ambiguity.... Take the
economy.... Looking at the
condition...of the U.S. economy today, there is no way on earth you could
honestly argue that...the priority is to eliminate a tax paid
disproportionately by the wealthiest Americans on their long-term
investments."
"Beating About The Bush"
The independent Financial Times editorialized (1/8): "President George W. Bush's budget
proposals provide little short-term fiscal stimulus. The attempt to make the
tax system more efficient is welcome, but leaves something to be desired. The cost is further deterioration in the
budget outlook.... The full elimination
of individual income tax on dividends will truly begin with income tax returns
filed in April 2004. The other
measures--including speeded up tax cuts and transfers to state
governments--would start to work sooner.
But, while the projected cost of the fiscal package over the next 16
months is almost 1 per cent of gross domestic product, the stimulus effect,
during the 2003 calendar year, is considerably less.... Ending double taxation is to be applauded. The unequal tax treatment of dividends causes
economic distortions, including a bias in favour of retained earnings over
payouts, debt financing over equity and share buybacks over dividends. In terms of improved capital allocation, the
incentive effect would be more powerful if the tax relief were concentrated at
the corporate level, though the tax cut would also be more expensive. Expectations of a boost to stock market
valuations should be modest."
FRANCE: "Tax Cuts
According To Bush"
Guillaume Goubert wrote in Catholic La Croix (1/8): “Every tax cut plan immediately raises two
questions: is it economically effective and is it socially fair? These questions are particularly pertinent
when it comes to President Bush’s plan.”
"Bush, The Recovery And The War"
Stephane Marchand observed in right-of-center Le Figaro
(1/8): “The war-in-the-making against
Iraq must not strike too severe a blow on American consumers and
investors. This is why yesterday
President Bush launched a spectacular preventive therapy plan.... The Bush plan...was conceived as a shockwave
for an economy whose recession is officially over.... But the slightest hitch, such as a war in the
Middle East longer than planned and therefore more deadly, could bring on a new
recession. Some say that President Bush
will not be reelected in 2004 if Saddam is still in power. While President Bush seems to share the same
belief, he has other worries as well.
While in France it is customary to joke about the U.S. President’s lack
of broad education, there is one thing George Bush knows backward and forward,
and that is what happened to his father....
This time around, the economic cycle seems to be in his favor. But George Bush wants nothing left to chance. A year from now, when the election campaign
begins, the Democrats must not be in a position to say that Bush neglected the
economy.... If the sun continues to
shine for ‘W,’ the recovery will make the war less painful to swallow. If Bush’s luck turns, the war could well sound
the end of the economic recovery.”
GERMANY: "Poor Financing"
Center-right Frankfurter Allgemeine observed (1/8): “The success of Bush’s program is
questionable. Getting rid of taxes on
stock dividends is long overdue, but it is doubtful whether this move will lead
to a stock market euphoria, as predicted by the White House. Giving companies more opportunities to write
off expenses and pushing up the schedule for the planned reduction of income
taxes are reasonable measures. The weak
point of Bush initiative is the financing.
Bush wants to pay for the new tax cuts with more credits, not with
budget cuts, which means the U.S. deficit will go up.... Bush must have the courage to save money
together with Congress to make the tax cuts possible. Otherwise they might turn out to be a threat
to the economy.”
"The Cost Of War"
Andreas Oldag maintained in an editorial in center-left Sueddeutsche
Zeitung of Munich (1/8): "It is
unclear whether a few tax cuts can chase away the ghost of recession.... All in all, the economic risks for the United
States and the world are much higher now than during the last Gulf War. Back then, the United States could count on
sharing the cost with its allies...ending up with a bill of only seven billion
dollars.... The United States is
rattling its saber at a time when the global economy is extremely unstable.... How many Iraq wars can the United States
afford? From a military standpoint, the
Pentagon is undoubtedly capable of sending Saddam into the desert. Nevertheless, the superpower’s hubris has
made U.S. politicians blind to the economic challenges. A global economic collapse would be as
detrimental to Western values as power-hungry dictators in Baghdad and
Pyongyang. The United States should
remember its responsibility as the world’s strongest economy, and this means
doing more than helping out the American rich.”
ITALY: "U.S. Pressing
On Latin America"
Leading business daily Il Sole-24 Ore judged (1/9): “Fiscal cuts, subsidies for the unemployed,
tax deductions for business companies.
Strong and determined, Bush’s war against the U.S. economic crisis has
broken out before the war against Iraq, if ever there is one. But the work has just begun for the U.S.
President. The next strategic goal will
be that of making up for the weakness of the domestic demand by strengthening
foreign demand, working on two fronts: within the WTO, but, most of all, by
speeding up the ambitious project for the creation of a single free-trade area
of the Americas from Alaska to Tierra del Fuego, by 2005, according to U.S.
plans."
"The Reagan Recipe"
A front-page commentary by Washington correspondent Vittorio
Zucconi in left-leaning, influential La Repubblica declared (1/8): “Consistent with the ideology and with the
interests that have led him to the White House, Bush yesterday presented to the
nation and to the new Congress his ‘growth and jobs’ plan.... The plan does not contain anything radically
new, since it simply goes along the same path taken by Reagan and later
abandoned by Bush father and by Clinton....
Bush, however, is making one step forward that not even Reagan dared to
make. Unable to completely eliminate taxes
on capital gains...Bush, for the time being, is eliminating all taxes on stock
dividends.... The ideology behind this
plan is, in sum, pure Reaganism: only by returning billions of dollars to the
richest people, in the hope that they may decide to reinvest them, the weak
machine of the U.S. economy, stuck for the last two years, will start moving
again and create new jobs.... Amid
conflicting criticism from the left and from the right, all doubts remain about
the effectiveness of a package that will affect the next ten years.”
"Bush: Fewer Taxes And
More Jobs"
New York correspondent Mario Platero commented in leading
business-oriented Il Sole-24 Ore (1/8):
“President Bush...‘made history’ in three ways.... First, by outlining the extent of his
economic plan, which is huge and unprecedented.... Second, by announcing elimination of taxes on
stock dividends--a decision that will change the way companies are led,
investments are planned, and capital is managed.... And, third, with his considerations and
decisions, the President for the first time introduced ‘the class of
investors,’ a new ‘social’ class across the board and capable of playing a
decisive role in electoral consultations.”
AUSTRIA: "
Recklessness Or Courage"
Economic editor Michael Prüller wrote in
centrist Die Presse (1/8):
"Bush's latest economic and tax proposals are as controversial as
his foreign policy. Tax reductions for
wealthy capitalists and that on loan.
With this project Washington again strongly distances itself from common
European practices. Recklessness or
courage after all? At any rate
'leadership', and most Americans do not want anything else at the moment."
BELGIUM: "President
Bush Economic Plan"
Chief editor Yves Cavalier editorialized in financial L’Echo
(1/9): “One can probably blame U.S.
President Bush for having prepared an economic plan that skillfully anticipates
the electoral campaign which is shaping up for 2004. Yet, in all the measures, one must point out
the abolition of the tax on stock dividends.
Of course, there will always be an economist who will consider that it
is ‘once again a measure for the rich.’
But that is a bit shortsighted and that certainly does not take one of
the main reasons for the current difficult economic situation into account: the
United States is experiencing an investment crisis much more than a consumption
crisis.... Yet, one must understand a
measure like the one George W. Bush just took as a way of restoring confidence
among private stock owners, as it is they who will first and foremost benefit
from it. On the contrary, the reduction
of the cost of the risk capital will benefit all, and more particularly
businesses. The latter should be able to
find in the stock exchange the natural tool to finance their growth and their
creation of jobs again."
"Ambitious And Necessary"
Serge Vandaele noted in financial L’Echo (1/8): “President Bush’s bet appears both ambitious
and necessary. Indeed, everybody in the
United States remembers the bitter defeat of George Bush Senior who, in 1992,
and in spite of a triumphant military campaign during the Gulf War, lost to
Bill Clinton because he had been unable to improve the country’s economic
situation when he had to.”
"Who Will Suffer?
Probably The Poor"
Yannick Hallet declared in the conservative Sud Presse
group of newspapers (1/8): “It is mainly
the rich who will benefit from George W. Bush’s economic plan. Seventy years after Roosevelt’s New Deal, his
plan is far from being as social. Almost
half of the $674 billion will make investors and speculators happy.... To avoid being too severely criticized, the
President has included several minor social measures, such as payments to help
unemployed find a job.... Big deal! At
the same time, one percent of the taxpayers will benefit from 42 percent of the
tax cuts generated by the suppression of the tax on stock dividends. The poor will drain their cup to the last
drop. The upcoming war in Iraq is likely
to lead to budget cuts. Who will
suffer? Probably the poor, unless the
prospect of the 2004 elections prompts President Bush to be more fair.”
"Bush's Achilles Heel"
Foreign affairs writer Carl Pansaerts remarked in financial daily De
Financieel-Economische Tijd (1/7):
“Bush knows that the poor condition of the economy is his political
Achilles heel. The 2004 presidential
elections are coming closer and Bush does not want to make the mistake his
father made..... Bush Jr. wants to win
the battle for Iraq and keep the economy healthy to safeguard his re-election
in 2004.”
CROATIA:
"Totalitarianism"
Nikolina Sajn wrote in Zagreb-based mass-circulation Jutarnji
list (1/8): "Today, Bush is
getting a second chance to push his internal affairs plan. It is expected that he will impose
conservative reforms and increase tax benefits, as well as decrease funds for
welfare programs. He should also be able
to get his military budget without problems, as well as probably push through
proposals such as oil wells in Alaska’s national parks."
DENMARK: "Proactive
Bush"
Independent business daily Børsen judged (1/9): "Bush is attempting to do something
about the U.S. economy. Both Bush and
Greenspan are attempting to prevent the world economy from stagnating. In comparison, Europe is totally
inactive.... The ECB ought to drop the
interest rate."
HUNGARY:
"Bush-Injection"
Deputy Editor Tamas Boronkay asserted in his influential
Hungarian-language business-oriented Vilaggazdasag (1/8): "President Bush’s package favors mainly
the rich. But regardless of the debates
about the package a good thing about it is (in case Congress passes it) that it
can give a boost to the American economy.
There will still be some elements of uncertainty (in the economy), the
planned war against Iraq, for instance.”
NORWAY: "Tax Package
To The Richest"
Foreign Affairs Editor Erik Sagflaat commented in the social
democratic Dagsavisen (1/9): “A
new present at the billion dollar level from President George W. Bush is
supposed to moderate the effect of a war in Iraq for the USA’s richest. The poorest will foot the bill.… President Bush senior won great popularity
after the relatively quick victory in the Gulf war in 1991. He lost the election the next year because he
didn’t get the economy fixed. Bush
junior has reason to fear that history might repeat itself.”
ROMANIA: "Bush
Economic Plan"
Political analyst Cristian Campeanu commented in the opposition
daily Romania Libera (1/9):
"The Democrats are counting on their main ideological trump card,
and are trying to turn the whole issue into a social class dispute. On the one hand, this strategy could prove
profitable since, in this way, the American left finally has a good opportunity
to bring back to the attention of public opinion the old demagogy of the ratio
between the rich and the poor. By
strengthening its voice, the left might gather a few more votes in the 2004
elections. On the other hand, though,
reviving the social class dispute issue could show how desperate the Democrats
are to make themselves visible again.”
SPAIN: "Questionable
Stimulus"
Left-of-center El País held (1/9): "There are reasons to share the fear of
those who believe that [Bush] could become the first U.S. President to create
more problems, in and out of the U.S., than he has tried to solve. For the moment, the [deficit] balance is not
comforting: the public surplus that Democrats left, has faded away in tax cuts
that haven't improved the confidence of U.S. citizens."
"Bush Plan And The Memory Of Keynes"
Business daily Expansión held (1/8): "Has Bush found the appropriate
prescription? Only time will
tell.... Each tax cut, especially if it
impacts those with enough income to create wealth, the savers, is good and
desirable. Also, a tax stimulus is
particularly appropriates in recessions, which contain less danger, like the
possibility of a return of inflation.
However, Washington, far from containing spending to make this a
sustainable plan, is increasing it, especially in the area of defense.... The impression is that we are faced with a
kind of fiscal reform disguised as an economic stimulus package that can
increase the public deficit in the next years and that threatens to cause an
increase in interest rates. So, what's
the last aim of this plan? Bush doesn't want
to leave the economy in the second tier, which could lose him many votes. His father lost the presidential election
because of the nineties recession and [George W.] has this image fresh in his
mind. The main consequence of the
package will be felt in 2004, the year of the presidential elections, and then,
will loose steam. Bush has taken on
Keynes' assertion that 'in the long term, we'll all be dead.' Now all that is left is for Congress to
support it."
"Bush And Taxes"
Centrist La Vanguardia editorialized (1/8): "The [Republican] party's majority in
both houses of Congress gives more chance of success to the proposal.... The functioning of the American Congress
gives a great power to certain key legislators, whose interests have to be
preserved in order to assure their favorable vote.... Democratic opposition in the House of
Representatives, which submitted its own fiscal plan last Monday, will
predictably focus its criticism on the presumed social inequality of the White
House's proposal."
"Bush Has It Wrong"
Independent El Mundo editorialized (1/7): "The Bush [economic] plan has only two
'small' mistakes: justice and effectiveness.
The tax exemption for dividends will only benefit the very small
percentage of society that are shareholders....
In the end, this is a big benefit for the most rich...disguised as an economic
stimulus.... Important economists have
denounced that the only sure thing in this plan is that it will aggravate the
budget deficit...and this on the eve of a costly war against Iraq.... It's clear that a recovery 'package' would be
good for the American economy, and by extension the whole world. But it can't be used to introduce unfair
measures, and in addition, ineffective ones.
The Democratic opposition and the moderate Republicans can reform
through the Congressional process this plan by Bush, who is obsessed with not
losing with the economy what he has won on the international stage, as it
happened to his father."
EAST ASIA AND PACIFIC
AUSTRALIA: "Bush’s
Plan Is On The Money"
The business-oriented Australian Financial Review
editorialized (1/9): “The bias of Mr.
Bush’s proposal towards high-income earners, the potential for tax avoidance in
the present structure of proposed tax reform, and the sheer cost of the reform
make it almost certain that the package will be substantially modified by
Congress. No doubt the Bush
administration has designed its proposal with an eye to the coming political
negotiations.”
"Bush Knows That It’s (Still) The Economy"
An editorial in the national conservative Australian
observed (1/9): "The President does
not have to face the people until November 2004, but it is obvious he has
learnt from his father what plays with the U.S. electorate, and is taking no
chances.... This is an intensely
political package involving astonishing amounts of money--the work of a White
House that knows its win in last November's Congressional elections and the
patriotic support generated by the threat of terror attacks and the possibility
of war against Iraq are no guarantee of re-election in 2004. It rewards the rich but it also provides
assistance to the middle-class Americans who will decide the election.... The impact of Mr. Bush's package will take
years to work its way through the U.S. economy, and even if he wins a second
term he will have retired before its impact is over. Whatever happens, the President's plan
demonstrates that for man with a chequered career path before acceding to the
Oval Office, George W. Bush remembers and learns."
"Bush’s Gamble With Tax Cuts"
An editorial in the liberal Sydney Morning Herald stated
(1/8): “Theoretically the tax cut is
sound because it will end the double taxation of company profits, at the source
and when they are distributed to shareholders.
But the stock market and the economy are not the same things. Historically the so-called 'trickle-down'
effect has consistently failed to provide the hoped for stimulus, and assist
the most needy. Even a generous
assessment...must conclude that many Americans will be left out in the cold.... It is worth noting that the cash injection
the package will deliver is timed to coincide with Mr. Bush's campaign for
re-election in 2004. Which means Mr.
Bush may be right to insist it is all about jobs--not least his own.”
CHINA (HONG KONG SAR):
"U.S. Reduces Tax On Stocks"
The independent Chinese-language Hong Kong Economic Journal
editorialized (1/8): "Regardless of
whether or not [Bush's new tax reduction proposal] will work, it makes sense
that reducing taxes on stock interests will stimulate the stock market. A rebound in the U.S. stock market will
eventually benefit the global economy.
The White House predicted that the new method will enable the Dow Jones
index to climb 10-20 percent, increasing overall investment, creating more job
opportunities, increasing consuming power and leading corporate profits to
rise. The public would be the ultimate
beneficiary. However, this all sounds
too good to be true. For a popularly
elected government, no policy is removed from the election campaign. The new proposal for tax cuts is designed to
attract middle-class voters--the investor class--who will comprise two-thirds
of the voting population in the 2004 presidential election."
JAPAN:
"Bush Trying to Boost Economy"
The business-oriented Nihon Keizai
editorialized (1/9): "The Bush
administration announced a 670 billion USD economic stimulus package over the
next 10 years to boost the ailing economy, in a bid to get President Bush
re-elected in the 2004 presidential election.
But the rival Democratic party expressed concern over a possible
negative effect of the projected Bush stimulus package on the economy: an
increased fiscal deficit.... There are
concerns that the package, coupled with expected increased spending for a
possible Iraq campaign, will result in a sharp rise in 'twin' fiscal and
revenue deficits, forcing a rise in long-term interest rates. Despite this, Mr.
Bush decided to give top priority to boosting the economy in order not to
follow in the footsteps of his father former President Bush, who despite his
leadership in winning the Gulf War, failed to get re-elected because of
economic factors."
INDONESIA:
"To Improve His Image, Bush Launches An Economic Stimulus
Package"
Leading independent daily Kompas
commented (1/10): “Although the
[September 11] tragedy constituted a hard blow to the [U.S.] economy, attention
to efforts to improve the economy on the part of Bush administration has been
lacking. On the contrary, Bush tends to
stay away from the economic issues, but has been very preoccupied with the
campaign against terrorism, attacking Afghanistan and likely with attacking
Iraq. Inevitably, the lack of economic
development has been used by the Democrats as in issue to win the 2004
elections. And before their image gets
worse, the Republicans are now launching restoration programs. Bush's efforts to change the negative image
in the economy are apparent in the replacement of Secretary of the Treasury
Paul O’Neill and the White House Economic Advisor Lawrence Lindsey.”
PHILIPPINES:
"Bush Endangers World Economy"
Columnist Boo Chanco wrote in the business section of the
independent Philippine Star (1/10):
"What the White House proposes for the U.S. economy always has far
reaching consequences for the rest of us....
If that proposal is passed by Congress but fails to stop the U.S.
economy from going into a threatened deflation, we all suffer the
consequence.... The question now is,
will the plan of Mr. Bush work?... Those
of us in developing countries know trickle down economics simply does not work
fast enough to make a real difference....
What the American economy seems to need is a recovery plan that kicks in
immediately, not years from now, and one that puts money in the pockets of
people who need it and will spend it right away to lift the economy fast. The problem with the dividend tax cut is not
only that it benefits the rich more but also, its benefit is felt a year after,
or only after those affected have filed their income tax returns for this
year.... We normally shouldn't care if
the Americans want to ravage their economy by allowing their President to carry
out his narrow ideological agenda of catering to the already rich and powerful
in American society. Our problem is, if America fouls up big time on their
economy, we all suffer the consequences.
That's thanks to the flawed world economic structure today. The rest of the world can only hope and pray
that no matter how an American President endangers the world economy, things
will work out fine in the end."
WESTERN HEMISPHERE
CANADA:
"Tax Cuts And The Phony Deficit Scare"
Terence Corcoran judged in the conservative National
Post (1/9): "The custodians of
big government spending are circling their wagons to set up a defence against
calls for tax cuts. And, man, are there
a lot of wagons!.... You would not
believe how many chickens can be cooked up as excuses not to cut taxes on
dividends, not to cut top marginal tax rates, not to lower the tax
burden.... Bush-style tax cuts are also
said to be inappropriate because they 'will cost' too much. This is true if you believe governments are
the owners of the money and that every time they cut taxes it is a 'cost' and
every tax increase is a 'gain'--a world view that turns the economy upside
down.... Through it all, Mr. Bush and
other proponents of tax cuts are dismissed as being 'ideological.' Well, when did that become a crime?.... Every argument over taxation is grounded in
ideology, none more so than the rank claims of those who refuse to support tax
cuts."
"Don't Try This At Home"
Toronto's leading Globe and Mail
published this view by economist Don Drummond (1/9): "President George W. Bush has proposed
reductions to Americans' taxes totaling more than $600-billion.... Give these measures an 'A' for sound tax policy but a 'D' when it comes
to short-term economic effect, where little stimulus can be expected.... Political wrangling will delay implementation
for months and much of the relief, particularly on dividends, won't reach
Americans' wallets until 2004. But the
package does improve the U.S. tax structure....
It is quite true that dividend income received outside of tax-sheltered
plans is skewed to the rich. But Mr.
Bush's plan has a number of measures for low- and modest-income taxpayers,
particularly families with children. The
criticism that best hits the mark is that expensive tax cuts are a risky
business when the U.S. government will be awash in red ink for as far as the
eye can see. Along with Americans' high
household debt, impaired corporate balance sheets, a huge trade deficit and
large fiscal deficits at the state level, the U.S. federal deficits are driving
a dangerous dependence on foreign savings.
This sounds like Canada 10 years ago.
Having tried the deficit and debt route and still not found a happy
ending, Canadians will not support Ottawa if it moves to match the U.S. tax
cuts at any cost."
"Electoral Dividend"
Editorialist Maurice Jannard opined in the centrist
French-language daily La Presse (1/8):
"Specialsits are almost unanimous in saying the new initiatives
will have little impact on the economy in 2003.... In the short term however stock markets
should benefit from the announcements....
Some have rightly pointed out Bush has smartly put in place measures he
can boast about when he runs for reelection in 2004.... As a whole, President's Bush budgetary
initiative is in line with the Republican tradition. It should not however find much echo in
Canada, where citizens have a more egalitarian view of society."
"Bush's Other War"
Chief editorialist Jean Robert Sansfaçon argued in the liberal
French-language Le Devoir (1/8):
"Only one of the important measures is new, it's also the most
costly, i.e., $364 of the program's $684 billion: the reduction of the tax on dividends.... In the longer term, the measures being
considered by the right will certainly engender positive results by inciting
Americans to invest their savings in a fiscal environment favorable to risks
taking. It has been proven that
countries where the fiscal regime is the lightest produce greater economic activity
even if that is not where you find the most equitable sharing of wealth."
ARGENTINA:
"U.S. Tax Cut"
An editorial in leading Clarin commented (1/10): "U.S. President George W. Bush has
launched a tax cut program aimed at boosting the U.S. economy.... His measures were received with skepticism
even amid the economic and financial establishment. One of the main objections is that tax cuts
could increase the imbalance of public accounts.... According to orthodox standards, the fiscal
deficit increases interest rates and generates uncertainty, which reduces
possibilities of growth.... On the other
hand, there is uncertainty whether the program will be able to counteract the
concern raised by the war on Iraq, which, if deepened, could increase oil prices,
thereby deteriorating expectations of investors and consumers, both in the U.S.
and the rest of the world."
"Bush Launches Broad Tax Cut"
Jorge Rosales, Washington-based correspondent for daily-of-record La
Nacion wrote (1/8): "President
George W. Bush submitted an ambitious plan of 674 billion dollars to boost the
U.S. economy based on tax elimination, in a move to prioritize domestic issues
when all eyes are placed on the war on Iraq.
In this way, Bush seeks to regain the initiative in economic issues, the
weakest side of the Republican administration, which will be the central issue
in defining the 2004 elections, when Bush will seek his reelection.... According to his style, Bush wielded a huge
pressure on U.S. Congress to obtain its support for the economic measures,
because while Republicans have the control of Congress they do not have enough
majority to guarantee the approval."
BRAZIL:
"Bush's Effort Not To Repeat His Father's Mistakes"
Business-oriented Valor Economico editorialized (1/9): "The main goal of President Bush's
package is to try to ensure that the U.S. economy resumes growth similar to
that of the past decade.... Bush will
run for president again in 2004 and does not want to meet the same fate his
father did in 1992 when--despite the popularity accorded him after the Gulf
War--he was defeated because of the country's poor economic performance. One of the problems with the measures W. Bush
has proposed is that they do not take into consideration the impact that a
likely war against Iraq will have on the economy (not to mention what North
Korea's nuclear challenge may represent)."
"Fiscal Package"
Liberal Folha de S. Paulo opined (1/9): "The purpose of the Bush
administration's fiscal package is to encourage investment in the stock
market.... The new fiscal package is
expected to raise the deficit to US$250 billion in 2003, without including the
cost of an increasingly probable war against Iraq. This enlargement of the
deficit will result in an increase of the public debt. In principle, an increase of the public debt
seems to represent an appropriate decision at this moment for the U.S.
economy.... But several analysts have
warned about the limits of the fiscal package with regard to its goal of
reactivating the U.S. economy, since a significant portion of its tax
exemptions will be directed to the wealthiest sectors of the population. Bush will run the risk of increasing the
public deficit without ensuring the resumption of sustainable growth."
"An Innocuous Plan"
An editorial in center-right O Estado de S. Paulo judged
(1/9): "Despite their magnitude,
President George W. Bush's measures to revitalize the U.S. economy have
received more criticism than praise, and even the most favored sector, the
stock market, has reacted negatively to the proposed stimulus. The U.S. economy basically needs resumption
in consumption to bring investment back.
But Bush's package has few instruments capable of forcing an increase in
demand for consumer goods, especially in the short run.... The measures have been considered scandalous
because they favor the rich only, and they will increase savings, not
consumption.... As Democratic representatives
have stated, it would be better to substantially increase assistance to the
unemployed and the states. The dollar
will be weakened, which could affect the entire world economy."
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