Gordon Brown today said that tax cuts aimed at low-paid workers and support for green technology had to be key parts of the response to the financial crisis, and also suggested that UK interest rates would be cut again soon.In a speech at the Council on Foreign Relations in New York, the prime minister called on other world leaders to join a global fiscal and monetary stimulus package to address the financial crisis. A key part of this package, Brown insisted, had to be a cut in taxation - especially for the poorest in society, who would help the economy by spending the extra money."What we have learned in the past is that when we cut taxes only half the money is spent, the rest is saved. Public works take time to come online," he said. "Those on low incomes are more likely to pass on the benefits of a tax cut."
Gordon Brown today said that tax cuts aimed at low-paid workers and support for green technology had to be key parts of the response to the financial crisis, and also suggested that UK interest rates would be cut again soon.
In a speech at the Council on Foreign Relations in New York, the prime minister called on other world leaders to join a global fiscal and monetary stimulus package to address the financial crisis.
A key part of this package, Brown insisted, had to be a cut in taxation - especially for the poorest in society, who would help the economy by spending the extra money.
"What we have learned in the past is that when we cut taxes only half the money is spent, the rest is saved. Public works take time to come online," he said. "Those on low incomes are more likely to pass on the benefits of a tax cut."
The Nobel Prize-winning economist who hailed Gordon Brown as the potential saviour of the world financial system said he would make a promising academic "if this Prime Minister thing doesn't work out". Paul Krugman outed himself as Mr Brown's No 1 American fan in a New York Times column after the Prime Minister announced a partial nationalisation of UK lenders last month to help shore up the banking sector. The column appeared the day that the Princeton professor was awarded the 2008 Nobel Prize for Economics and helped to persuade US and European policymakers to line up behind the UK model. Mr Krugman was among six top economists who met Mr Brown in New York last night over drinks at the Waldorf Hotel and, in a BBC interview afterwards, he once again lavished praise on the former Chancellor. "If this Prime Minister thing doesn't work out, he has a pretty good career as an academic," he said. "The level of discussion - particularly for someone accustomed to the US over the last few years - was awesome." Mr Brown stopped off in New York en route for this weekend's summit of G20 leaders in Washington, where he will be pushing for a co-ordinated fiscal stimulus among the major economies to stop a recession spiralling into a full-blown depression.
The Nobel Prize-winning economist who hailed Gordon Brown as the potential saviour of the world financial system said he would make a promising academic "if this Prime Minister thing doesn't work out".
Paul Krugman outed himself as Mr Brown's No 1 American fan in a New York Times column after the Prime Minister announced a partial nationalisation of UK lenders last month to help shore up the banking sector. The column appeared the day that the Princeton professor was awarded the 2008 Nobel Prize for Economics and helped to persuade US and European policymakers to line up behind the UK model.
Mr Krugman was among six top economists who met Mr Brown in New York last night over drinks at the Waldorf Hotel and, in a BBC interview afterwards, he once again lavished praise on the former Chancellor. "If this Prime Minister thing doesn't work out, he has a pretty good career as an academic," he said. "The level of discussion - particularly for someone accustomed to the US over the last few years - was awesome."
Mr Brown stopped off in New York en route for this weekend's summit of G20 leaders in Washington, where he will be pushing for a co-ordinated fiscal stimulus among the major economies to stop a recession spiralling into a full-blown depression.
I was watching 'Flood' DVD yesterday - the first UK catastrophe movie showing how a storm, a surge and a high tide conspire to flood London by the barrier being overtopped. Simple-minded, but not without excitement.
The solution, according to the professor character of Tom Courtney, is to catch the tide on the turn and release all the flood water behind the sluices so that the power of the surge and the storm are defeated by the gravity of the downstream release. And of course the lowered barrier has to be raised to allow this to happen. Therein the movie drama.
But it occurs to me that in a world of 'Love Me' numbers, where perceptions and expectations outrule statistical risk evaluation, the concept of the counter surge is not inappropriate. The economy as a psychological phenomenon. Hope and change as drivers. A tax cut is a psychological driver - in the short term... You can't be me, I'm taken
The people should have pride when paying taxes into their own government.
There will be surge of births 9 months from the date of Barack Obama becoming President-elect. People are not rational ;-) You can't be me, I'm taken
Those are more immediate stimuli, but for something along the lines of what we're facing (very real possibility of deflation), governments are going to need programs that put people into actual work with serious wages/salaries. Takes longer to draw up plans for that kind of thing, of course, but I think it's the more forceful pillar of a stimulus package in the end. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
Unemployment benefits, and other forms of income support, as you say, are far more effective than tax cuts, even when they are said to be for the the benefit of the poor. (Unless they're talking about doing away with sales and vat taxes and replacing them with more highly progressive income tax regimes, which I doubt.) Fai de bèn a Bertrand, te lou rendra en cagant
I'd ad aide to the state and local governments in America's case, since that will save jobs directly within those governments as well as keep services up and running, which keeps other jobs going and provides for the general welfare of communities. States and locals generally have balanced-budget amendments, so when things go to shit, they get slammed. Similarly, but going the other way, they spend big during booms. This is, of course, the opposite of how it should work. It's completely insane, but it's nonetheless the reality of the system.
Sales taxes in the states are set by the state governments, and local governments add to the rate for their cut, so the feds can't really do anything about those. Those are already somewhat progressive, because essentials are generally not taxed, but I agree that progressive income taxes are better than sales taxes.
If you were going to design tax cuts to maximize the impact, you'd want to do them on people at or below (say) $45k/year, and give rebates to those below the threshold under which they don't pay income taxes. You could also jack up, for example, the Earned-Income Tax Credit or other negative-taxation mechanisms. Conservatives want live babies so they can raise them to be dead soldiers. - George Carlin
