Redstate

By mdetlh Posted in Special Events — Comments (1) / Email this page » / Leave a comment »

When the announcement for a request for a stimulus package was made, it in effect requested a package that would be significant, enacted soon and temporary due to the pending increased entitlement spending that is needed soon. My theory is that the stock market sold off enough to coincide with the end of supply side guidance that has been in effect since President Reagan http://stockcharts.com/commentary/archives/cww20080120m.html
http://www.ibdeditorials.com/IBDArticles.aspx?id=286155755519653

Have you ever gone to a big game with relatives and when the teams came into an arena, one of your relatives starts cheering for the other team?
This editorial and my own estimations would lead to the theory that Pelosi is cheering for the wrong team. As it is this nugget of economic research was included in her statement on the need for a stimulus package,
"We're so used to Democrats pushing tax hikes as the answer to all of America's problems that we were taken aback to find the following words buried in Pelosi's release on the stimulus deal: "Economists estimate that each dollar of broad tax cuts leads to $1.26 in economic growth.". . .

"In the broadest such study ever, University of California economists Christina and David Romer looked at every tax change in the U.S. after World War II.

Their unambiguous conclusion: "Tax cuts have very large and persistent positive output effects." Indeed, a tax cut of just 1% boosts GDP by about 3% for several years, they found.