Where tax cuts will get us
Economics 101, folks. Individual tax cuts are inflationary, with more money leading to more purchases leading to greater demand. Business tax cuts are also inflationary, with businesses using the extra money for a mixture of expansion, higher dividends and stock buy backs.
Expansion is inflationary, particularly in this time of full employment, because it leads to higher wages, which equals more purchases and creates higher demand. Higher dividends mean more money for stockholders, again leading to higher demand. And buying back stock puts one-time money in those same pockets (stockholders) with the same outcome.
Inflation is already at its highest level in six years. Alas, the Fed will raise rates with even a whiff of inflation and this tax cut will produce a whole lot of anxiety for them. Furthermore, the pending tax cuts are also deficit-inducing, meaning the government will borrow more, which also drives up interest rates. Mortgage rates will therefore rise, along with credit card and auto loan rates.
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No big deal for people who can pay cash for everything, but for the lower- and middle-income earners, what is temporarily gained in tax cuts will be lost over time through higher interest.
Richard Vogt, Newton
More on military not needed
The attempted subway attack in New York, the mass shooting in Las Vegas, and the recent hate crime at a Wichita Mediterranean restaurant have intensified our collective fear of public places. It is human nature to form opinions and make decisions “from the heart,” especially when the proposed solution seems to ameliorate a negative emotion. In other words, decisions are often made, not with a rational mind, but with our emotional response.
In the coming weeks, Congress will be voting on the proposed federal budget, which includes a $60 billion increase in spending at the Pentagon. I am urging our members of Congress, and their constituents, not to react to these acts of violence by supporting increased spending at the Defense Department.
I don’t have all the solutions to preventing these acts of terror and hate on our own soil, but I do know that increasing spending on our military is not the answer. Please contact Senators Moran and Roberts and our 4th Congressional District Representative, Ron Estes, and urge them to oppose any and all increases to the Defense budget.
Susie Ternes, Wichita
Defense needs oversight
Kansas voters selected fiscal conservatives to represent us in D.C. In an effort to fulfill a GOP promise of smaller government, Congress is attacking the issue on a couple of fronts.
One is a tax-cut bill that relies on the uncertain outcome of increased gross domestic product and trickle-down economics to offset its $1.5 trillion cost. Another is a budget that cuts spending in all departments except Defense, where a big increase is proposed.
I pray you each follow President Reagan’s policy of “trust but verify.” We all want a strong defense. But we all recognize the Pentagon is fraught with waste, fraud and abuse. Please require the Defense Department to provide you with an audit proving they are spending our money efficiently.
GDP growth can offset tax cuts and trickle down may work this time. But will they?
Recently, President Trump signed a continuing resolution that expires Dec. 22. I ask that you support another CR that extends funding at current levels until:
1. The Defense Department undergoes an audit like every other department has done.
2. The GDP shows signs of increasing sufficiently to offset the cost of the tax cuts.
Tom Savage, Bel Aire
Ike deserves world of credit
President Eisenhower deserves all the credit that the writer of “Do like Ike did” (Dec. 6) gives to him for managing the post World War II development of the U.S. and over time the recovery of the entire developed world — including our WWII enemies.
But Ike had an advantage not now available to like-minded leaders — ours was the only developed country with a complete functioning industrial capacity. The others had been effectively destroyed in the war.
We prospered by being the engine of growth for everyone else, and — to be praised — gave them the means to someday compete with us. And, notably, we didn’t impose economic penalties on those countries we had greatly helped to defeat.
Harry Clements, Wichita
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