In laying down a sweeping tax reform Thursday, House Republicans have put all their trust into a central tenet of conservative thought: Tax cuts will spur growth.
By itself, it may not be that controversial an idea. But for the current US economy, it’s also not the obvious need.
In fact, a big challenge for the GOP is to show that its specific mix of tax cuts will provide enough short-term oomph to America’s economic engine now that it will have enough momentum to counter some of the long-term drag from more federal debt.
And that is an iffy proposition, economists say. It depends on two things: the timing of tax cuts and whether they make the economy more competitive...
...Do America’s taxpayers really need a stimulus to spend more? Probably not.
“If you have tax cuts [to fight] a recession, that’s one thing,” says Michael Klein, an economist at Tufts University's Fletcher School of Law and Diplomacy in Medford, Mass. But “if we’re already at full employment, it’s not clear how much you can goose the economy beyond that.”
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