Impact of the Bush Tax Cut

Paper Summary:

This paper examines the potential impact of the proposed Bush tax cut by reviewing how it would affect demand for products and whether it would stimulate job creation -- both factors that could lead to long-term economic growth. After a brief explanation of supply and demand theory, the paper critiques the White House's claim that the tax cut would give a family of four an additional $1600 annually. The paper concludes that any individual gain would likely be offset by the national loss: wide-scale slashing of federal budgets for social services, including for children and the elderly.

From the Paper:

"It is no secret that America's economy is in a bad way. People are losing their jobs, home foreclosures are up, and most economic indicators are heading south and have been heading south for the past several years. In order to remedy this problem, President Bush has proposed massive tax cuts in every year of his presidency. Although none of his tax cuts have made it through congress full strength, there have been tax cuts every year of Bush's presidency. Bush's original tax cut called for a 726 billion dollar tax cut over the next ten year. Due to political circumstances, Bush has said that he will accept a tax cut of 550 billion dollars over the next ten years. Bush argues that the bad economy needs tax cuts, that lower taxes will help the economy grow again."

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