One Tool Left to Jumpstart Economy: Lower Taxes

By ColumnsFOXBusiness

What is the Economic Impact of Taxmageddon?

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What is the Economic Impact of Taxmageddon?

Former CBO Director Douglas Holtz-Eakin on the economic consequences of the looming tax hikes.

I often tell my children that what they do every day of their lives tells a story about them. I include that the friends they keep reflect positively or negatively on them as well.

I firmly believe that the same can be said about economic and earnings reports released on a weekly basis. Often times, these reports are told in a language that most people aren't familiar with, and as a result they are often dismissed as not relevant and assumed to have no relevance.

You know what you get when you assume. These reports, often deemed boring, tell a story. To understand the story of the world economy in simple terms, one doesn't need a specific background or education. The world economy is often thought to be growing at a "good" pace when you see gross domestic product at about 3%.

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If it is growing much faster than that, government rates rise to slow the growth down because very fast growth is interpreted as fueling inflation. If the world economy is growing too slowly, the governments will often lower rates to stimulate the world economy.

Today the story is troubling -- more so than in any other time I can remember. The tool of lowering interest rates is no longer available to us. Rates are basically at zero and we obviously cannot lower them any further. 


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