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From: orb@whuts.UUCP (SEVENER)
Newsgroups: net.politics
Subject: Re: Supply-side Economics: the  Savings
Message-ID: <362@whuts.UUCP>
Date: Tue, 5-Nov-85 16:19:29 EST
Article-I.D.: whuts.362
Posted: Tue Nov  5 16:19:29 1985
Date-Received: Thu, 7-Nov-85 21:36:25 EST
References: <756@whuxl.UUCP> <29200244@uiucdcs>
Organization: AT&T Bell Laboratories
Lines: 48

In all the replies to my article on the decline of the
savings rate to its lowest level in this century I 
have noticed that nobody wishes to defend this aspect
of supply-side economics.  T.C. Wheeler simply denies
that supply-side economics has anything to do with
increasing savings and investment- merely showing that
he has no notion of the "theory" behind supply-side
economics. (that less taxes for the wealthy would mean
more savings, which would lead to more investment, and
consequently improved production which would ultimately
miraculously lead to actually increased government revenues
so that the tax cuts would pay for themselves)
This same ignorance is shown by another poster who says
that it doesn't matter what people spend their money on,
since it is better to leave this choice to them than the
government.  Whether this happens to be true or not doesn't
matter to *my point* which is that according to *supply-side
theory* less taxes would indeed lead to increased savings.
So far after 4 years this has not proved to be true.
Needless to say other supply-side premises, such as the
fantastic premise that tax cuts would pay for themselves
have proved to be so fantastically off the mark that
they are not even mentioned in the wake of the largest deficits
in our country's history.  While our government is in debt
so huge that simply the interest on the debt is one of the fastest-
growing portions of the federal budget, the savings rate is
the lowest in a century, while *consumer debt* is also at
the highest point in history.
Meanwhile the SEC just relaxed restrictions on margin rates 
in the stock market to pre-Depression levels because the SEC
said that the limits to margins set after the stock market
crash of 1929 were no longer needed.  This is in a year
that has seen more bankruptcies than any year in history
and the collapse of savings and loans in Ohio and Maryland
as well as a major crisis in one of the nations largest banks
in Chicago.

Is it nonsensical to suggest that our nation is standing
on an economic house of cards- placed in that position in no
small measure because of the rampant fiscal irresponsibility
of the Reagan administration?
 
It only seems apropo to me that Reagan immediately put up
a picture of his idol, Calvin Coolidge, in the White House
when he moved in.  He may attain Coolidge' and Hoover's
notoriety for longterm economic disaster.
 
         tim sevener  whuxn!orb