Cut Interest Rates, Not Taxes

The President's instincts to stonewall rising pressure from Congress for a quick-fix tax cut are 100% correct. True, tax cuts have been used effectively to kick-start the economy out of recession -- but this is no ordinary downturn. Cuts would do more harm than good, raising hob with the deficit, exacerbating our trade balance because of consumers' propensity to buy imports, and occurring too late to do much stimulating before mid-1992 at the earliest. This is a recession unlike any other, because the economy is held back by a larger set of long-term structural problems. It will take years to address the recalcitrant budget deficit, chronically poor productivity growth, a crumbling infrastructure, the job squeeze from restructuring in industries from banking to retailing, the low savings rate and record burden of debt, and the glut of commercial real estate. These long-run problems require long-run solutions.

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