"Possibilities of the Future"



     According to  the article, "Mistrust of GOP Plan Won't Stop Tax Cuts" , written by Alan
Murray of the "Wall Street Journal", tax cuts are on the horizon, even though the voting public 
has become wary of politicians promising tax cuts in a election year.  The author states that this
year "If you are a politician talking about tax cuts in an election year, you are carrying a big sign
that says: I'm a typical politician. I will say anything to get elected, and your vote."   He points out
that this is the type of politician that the public wants voted out."   Though he also goes on to
state that this does not mean that the idea of tax breaks is by any means,  dead, due to the past
success of the Reagan years supply side economics.
     The Idea may also have by-partisan support due to Clinton's  unfulfilled promise of a
middle class tax break.   Though luckily, recent budget rules have made it next to impossible for a
bidding war between parties, to repeat such as  occurred  in 1981 when Ronald Reagan 
announced tax breaks that lead to Congress to cut taxes left and right and  ultimately led to a
tripling of the national debt.  Unfortunately, it seems to me, that both parties are wrong, while
being partially right.  The democrats are right in believing that any substantial tax breaks will
result in an increase of the national debt.  While the Republicans are right that increased spending
in programs such as health care will do the same, without the positive growth that is characterized
by  supply side economics.   Where I do find fault, is the predominating philosophy among
democrats that  government spending increases public wealth.   While in reality, government
doesn't create wealth household and firms do.   The Republicans are also flawed in their thinking
that supply side will solve it all. The reality of our economy is that supply side economics will
definitely make a positive influence in our economy in the short term, while if there aren't severe
spending cuts there will be long term economic problems such as a weak dollar, inflation, and high
interest rates.
     Ideally, there could be a mix of the two philosophies, where there are moderate tax breaks
coupled by spending cuts on programs that are not directly reflected in the GNP.   This would
compensate for the governments initial loss of revenue, insuring both short term and long term
growth.   Though no one , including myself, foresee this happening anytime in the near future. 
Basically, I foresee three different outcomes from the three fore-mentioned options.
If the government were to increase spending without increased taxes there will be a definite down
turn to the current economic situation, though I doubt that an increase of taxes will change this
scenario.   If the government cuts taxes without cutting spending there will be short term growth,
coupled by long term economic slowing.   While a combination of tax breaks and spending cuts
would be positive for both the short and long terms, I believe  the likelihood of this happening is
little to none.
     The likelihood of any one of these options becoming reality hangs  on the results of the
November elections.   If the electorate shows favoritism for those candidates who propose tax
breaks, a return to the days of Reagan could be imminent.  Things could change from "Tax and
Spend" to borrow and spend, causing long-term economic problems.   If the electorate shows
favoritism towards those who are big government advocates, unwilling to cut programs that are
not reflected in the GNP, I foresee both short and long term problems for the economy caused by
lack of money available to private entrepreneurs.   If there is no sign of favoritism towards either
type of government candidate, I would assume, that the two parties would have only two choices:
compromise, or,  deadlock.   I believe that in the face of the possible options, compromise is the
only choice that would minimize the negative aspects of both party lines.