More than 400 economists today attacked President George W. Bush's $674 billion tax cut proposal by saying it will weaken the US economy over the long term by deepening budget deficits.
In a full page ad in today's New York Times, the economists, including 10 Nobel laureates, said the plan proposed by the White House "is not the answer to our current economic problems".
The campaign unveiled last week is spearheaded by the Economic Policy Institute, a Washington research institute.
The tax cuts, the economists argued, would produce little growth or jobs and would lead to fiscal deterioration that could reduce the capacity of the government to finance such things as the Social Security pension programme and the health care for the elderly.
Prof Lawrence Klein, a Nobel laureate from the University of Pennsylvania, told the press briefing that "this is not the time to start fiddling around with the tax system," adding that there are "much better ways to get investment going".
Passing these cuts, the economists said, would worsen the long-term budget outlook, adding to the nation's projected chronic deficits, which are estimated to hit a record nominal sum over the next two years even before factoring the cost of a possible war with Iraq.
To be effective, the economists say a stimulus plan should rely on "immediate but temporary, spending and tax measures to expand demand," and should also rely on "immediate but temporary incentives for investment".
"Such a stimulus plan would spur growth and jobs in the short-term without exacerbating the long-term budget outlook," the economists said.
AFP