January 4, 2002

Washington, D.C.-Small Business Survival Committee (SBSC) officials today criticized  Senate Majority Leader Tom Daschle's  (D-SD) announcement of his economic plan.  In his announcement, Daschle blamed tax cuts for the current recession.

"It's ridiculous for Senator Daschle to blame the Bush tax cut for the current recession," SBSC President Darrell McKigney.  "If there is someone to blame for making the recession worse, its Senator Daschle, who has stood as a roadblock to economic recovery. He's been the main obstacle to real economic stimulus, a proactive energy policy, and an expansion of free trade.  If the recession continues, it should be called the Daschle recession."

SBSC chief economist Raymond J. Keating added: "Senator Daschle has his economics badly mixed up.  First, he might want to acknowledge that the economy started to slow down in the third quarter of 2000, while the policies that he praised were still in effect and long before President George W. Bush was elected and any of his policies were passed.  Second, he makes the bizarre claim that tax cuts somehow made the current recession worse.  How can that be since the bulk of the Bush tax relief package has not yet been implemented?  Third, he asserts that tax relief increases interest rates by causing budget deficits.  However, history clearly shows absolutely no links exist between U.S. federal budget deficits and interest rates.  Instead, interest rates are more a function of monetary policy and economic growth.  Incidentally, budget deficits are rarely ever caused by tax relief, but instead by too much government spending and a downturn in the economy, as is the case today."

Keating concluded: "The only legitimate criticisms one can levy against the Bush tax cut are: 1) the income tax cuts take too long to be implemented, not being fully phased in until 2006; 2) the death tax is not eliminated until 2010; and 3) the entire tax cut package is wiped out in 2011.  The policies needed to get the U.S. economy growing at a robust clip include immediately implementing the Bush tax package, while making it permanent, and deeply cutting the capital gains tax.  These steps will help to spur working, investing and risk taking-the engines of economic growth."