sent 1 February 2001
Re: "Medicine for the Economy," New York Times, 1 February 2001.

To the Editor:

The purpose of a tax cut in the face of recession risks this year ("Medicine for the Economy", NYT, February 1) should be to support personal incomes and economic growth this year, not to match hypothetical revenues to spending needs over the decade ahead. Cutting taxes mainly for the sweet hereafter could actually delay private spending plans and make our immediate economic problems worse.

That being so, Congressional Democrats should favor a substantial, but near-term, tax cut whose benefits flow mainly to working American families. There are many possibilities: a one-time credit or rebate, or an expanded EITC, or a temporary cut in the payroll tax, or a revival of Richard Nixon's General Revenue Sharing that would permit states and localities to rebate sales and property taxes. The proper way to limit the scope of tax cuts for the long term is to phase down such measures over time, knowing that future Congresses can extend them if needed. So far as possible, the basic structure of estate, capital gains and progressive income taxes at the Federal level should be left alone.

Yours sincerely,

James K. Galbraith

L. Randall Wray
Professor, Economics Department
211 Haag Hall, 5100 Rockhill Road
University of Missouri
Kansas City, MO 64110
phone 816-235-5687, fax 816-235-5263