Y professors call Dole tax plan a ploy, impractic

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    By KEVIN ELZE

    Some BYU professors see presidential hopeful Bob Dole’s economic policy of major tax cuts more as a political ploy than sensible economic policy.

    Economics Professor C. Arden Pope said, “It’s the political season. Instead of `Read my lips. No new taxes,’ it has been one upped with `Read my lips. Fifteen percent less taxes.’ ”

    Pope, along with other BYU professors, believes that even if Dole is elected, it is unlikely that he would be able to enact the proposed reduction in taxes.

    Dole’s tax plan includes a 15 percent cut in income taxes and a $500 per child tax credit, as well as capital gains taxes cut in half. Dole also proposes major spending cuts and savings from the budget.

    “My sense is that this is an effort on the part of Dole to attract attention to himself,” said Richard Davis, associate professor of political science. “People like the idea of tax cuts. He hopes that it will be a dramatic move that will give his campaign a boost just before the convention and that he will bounce up in the polls because of this popular proposal. I think it will likely spur interest in what is going to happen at the convention.”

    Davis said Dole has been far more concerned with deficit reduction and has seen tax cuts as a short-term popular tool that could ruin the country’s economy.

    “This is a dramatic departure for him,” Davis said. “I think this is primarily short-term on his part.”

    Dole’s plan relies on the tax cut spurring the economy by providing the American public with more money to spend on goods and services. That will create a more active and stronger economy, according to Dole and his advisers.

    Economics professor Kim Balls believes that although the plan might work in the short run, in the long run it is not good policy.

    “It may work in the short run because fiscal policy sometimes has a more immediate impact than monetary policy,” Balls said. “In the long run it is going to raise interest rates. It destroys the investment incentives that foster long term growth.”

    “There may be some growth that is stimulated by the tax cut, and as a result there may be revenues that come in that will partially offset the tax cut but it won’t totally offset the tax cut. It will only offset it by a small amount,” Pope said.

    As well as being skeptical of the impact the economic growth will have on the national deficit, critics of the tax policy are also concerned about the cuts in spending that Dole suggests.

    In the plan, Dole says he won’t cut Medicare, Social Security or military spending while promising that he can still balance the federal budget by 2002.

    The skeptics argue that a reduction in revenues of the federal government without changing expenditures will increase the deficit.

    “There is a very long tradition that if you try to cut the deficit by cutting taxes as revenues go up, you lose interest in cutting spending and the spending cuts don’t happen,” Balls said.

    Pope said one concern in Dole’s proposal is dealing with spending cuts while not affecting the defense, Social Security or Medicare.

    “The interesting thing is that (Dole) can be somewhat specific about the tax cut but he’s not specific at all of the programs that he might cut back on in terms of spending, and that is always a concern,” Pope said.

    Davis doesn’t believe Dole expects to implement the tax cut proposal if elected.

    “I think he realizes that if he wins the American people aren’t going to hold him completely to this (plan),” Davis said

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