Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.2 9/18/84 exptools; site whuts.UUCP Path: utzoo!lsuc!watmath!clyde!burl!ulysses!mhuxr!mhuxn!ihnp4!houxm!whuxl!whuts!orb 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