Tags: lawrence summers | gop | tax cuts | economy

Lawrence Summers: Tax Cuts Won't Help 'Sugar High' Economy

Image: Lawrence Summers: Tax Cuts Won't Help 'Sugar High' Economy
(AP)

By    |   Monday, 11 December 2017 11:07 AM

Although the U.S. economy appears to be doing well, its structural foundation is actually weakening and the tax cuts the Republicans are on the verge of passing will do no good in addressing the problem, Lawrence Summers, former Treasury secretary in the Clinton administration, wrote in The Washington Post, on Monday.

"The best available evidence suggests that signs of current market and economic strength are largely unrelated to government policy, that the drivers of this year's economic strength are likely transient and that the structural foundation of the U.S. economy is weakening," Summers wrote, referring to the situation as a "sugar high."

He gave as evidence the decline of the dollar against the yen and the euro since the election by some 7 or 8 percent, insisting that "if something fundamental had happened to improve the U.S. business environment, we would have seen capital inflows and an appreciating currency."

Summers, who was also an economic adviser to President Barack Obama, added that growth for 2017 and for next year appears likely to be only marginally greater than they were before the election, while other countries, notably in Europe, have seen greater upward forecast revisions.

He said that even the U.S. stock market, which has increased by a much higher than expected 25 percent since the election, "is running behind that of Japan and Germany, belying the idea that the market is being driven by U.S.-specific policy factors."

Summers said there are poor prospects for sustained rapid growth, which he said is not surprising because "Despite record-low capital costs and abundant corporate cash as inducements to investment, productivity growth has been slow."

Even if growth can somehow be maintained or boosted, he contended that "it is foundational for a healthy economy that its benefits be widely shared," but "in the United States, inequality has steadily increased, and much of the growth that has taken place has been captured by a small share of the population."

Summers said that the only way to achieve healthy growth is to enact successful measures, but the GOP tax plan "exacerbates every important problem it claims to address, most importantly by leaving the federal government with an entirely inadequate revenue base."

"This will further starve already inadequate levels of public investment in infrastructure, human capital and science," he said.

"It will likely mean further cuts in safety-net programs and cause more people to fall behind. And because it will also mean higher deficits and capital costs, it will likely crowd out as much private investment as it stimulates."

© 2018 Newsmax. All rights reserved.

   
1Like our page
2Share
Politics
Although the U.S. economy appears to be doing well, its structural foundation is actually weakening and the tax cuts the Republicans are on the verge of passing will do no good in addressing the problem...
lawrence summers, gop, tax cuts, economy
423
2017-07-11
Monday, 11 December 2017 11:07 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
America's News Page
© Newsmax Media, Inc.
All Rights Reserved