Saturday, March 08, 2008


This sounds about right to me. The economy according to Paul Mirengoff of Powerline:

"After five years or so of strong job growth, the economy has slowed and private-sector employment has fallen for the past three months. The fall is due primarily to job losses in the construction and manufacturing sectors. However, as Rea Hederman and James Sherk of the Heritage Foundation point out, wages have continued to grow at a solid pace, and the unemployment rate (4.7 percent) is still historically low. In short, “the economy is clearly sluggish, but America is hardly in an economic emergency.”

In this context, Hederman and Sherk argue that Congress should resist the responses proposed by various Democrats – not just the utterly counter-intuitive idea of raising taxes during an economic slowdown, but also extending unemployment insurance eligibility from six to nine months and restricting free trade. Unemployment insurance, they note, is designed to provide workers with insurance against the risk of involuntary job loss, not to stimulate the economy. Studies have found little evidence that increasing benefits boosts the economy. Moreover, “paying workers to stay unemployed for a longer period of time does little to promote economic growth.” Meanwhile, nearly every serious economist agrees that free trade helps the overall economy.

Instead of taking these desperate measures, Hederman and Sherk recommend that Congress lower taxes on businesses. American businesses pay a 35 percent tax rate, much higher than that in most developed countries. The high tax rate “makes America less attractive to investors and puts American businesses at a competitive disadvantage internationally.”

Quite apart from the present state of the economy, our business taxes should be brought into line with those of our competitors. The current situation should provide the impetus to get this done. Unfortunately, the Democrats would rather push for counter-intuitive, counter-productive approaches. "

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