Letter December 12, 2003: Seattle PI

Seattle PI

THE ECONOMY

More cuts in spending could make things worse
"Economy booms; now cut spending," advises a Nov. 26 editorial. Don't pull the trigger, the gun is pointed at your head.

You quote Lyle Gramley, former Federal Reserve governor: "The strength and breadth of the economy's growth are impressive. We've got enough going on now so that it's clear that this recovery is sustainable at a growth rate of about 4 percent."

Investment stagnates, unemployment is stuck at more than 6 percent. What exactly is strong and broad?

To call for spending cuts as you do is reckless and foolhardy. Much of this difficulty we're in now arises from the cutbacks in state and local government spending, which amplified the downturn. But cutting federal spending too will complete the capitulation to the rich, I suppose. (Keep in mind, there is no plausible level of spending cuts that would make a dent in the enormous deficit.)

Rescind the absurd tax cuts to the wealthy. Keep them in place for the poor and middle class, if you want, since this is what stimulates the economy, and it's not the bulk of the total tax cut bill. (In Washington, for example, according to the Institute on Taxation and Economic Policy, the top 1 percent of Washingtonians will get a $76,865 tax cut this year. It amounts to four times the total cuts for the 20 percent in the middle. The average cut for those in the middle 20 percent will be $987.) Take the savings, give it to the state and local governments so they can restore services and spending, or finance health care with it, like Dick Gephardt proposes.

This president has engineered a mess of historic proportions. Any recovery will be choked off by booming interest rates, because investment demand will have to compete with government demand for money in a climate of a declining dollar, which is pushing foreign capital overseas. Eventually, of course, the debt will force cutbacks in Social Security, Medicare and other necessary programs, cutbacks of proportions we are not willing to contemplate.

Alan Harvey
Seattle