Tuesday, February 13, 2007

The Economy Keeps on Rolling

Yet so much more to undo

Ed Lazear, chair of President Bush II's economic advisors, in his annual report said that the numbers will keep on keeping on, eg. 3% growth (eg faster than population thus more per person) and less than 5% unemployment (eg the 'natural' rate allowing for factor flexibility). Inflation has not been a problem since Greenspan.

Lazear calls for tax cuts. Tax cuts are always good in that they let us keep more of what we earn and work for. However, all is not quiet on the front: tax cuts only work when coupled with spending cuts. And Bush II as we all know has been the biggest spender since Gatsby (although one of the points of Fitzgerald's book is that we never learn the source of Gatsby's money...we know Bush II's money is the taxpayers).

The White House is indeed predicting a budget surplus - but this is in 2015 and alot could happen between now and then. Not the least of which is our overextended unsustainable pension system. Lazear is also calling for free trade, in jeopardy with the traditionally protectionist Democrats in power across town. Free trade is also good as it removes special interests from human exchange and will help keep the macroeconomic numbers looking good.

The short term is now and the long term is now and we are always in equilibrium so time for a rethink, eg cut the military overseas and cut the meddlesome and out-of-touch Federal Government. Just imagine what the numbers could be without a bloated Uncle Sam.

* Note: Although the inflation numbers are undercontrol, alot remains here as well, eg a non-interventionalist monetary policy. Intervention, the clicks up and down, helps bankers (some people) but hurts consumers (everyone).