Past and Future Economic Stimuli
March 5, 2002
With further tax relief seemingly off the table, there are certain other policy initiatives available to revive the economy. Glenn Hubbard, chairman of the President's Council of Economic Advisers, cited some of them at a recent conference sponsored by Investor's Business Daily.
Some have already been initiated with great success and others await future action.
- Putting an end to runaway lawsuits through comprehensive tort reform could save the economy an estimated $200 billion a year, add a percentage point to gross domestic product -- and represent the equivalent of a 2 percentage point cut in the payroll tax.
- The two major trade agreements of the 1990s, the North American Free Trade Agreement and the Uruguay Round, have been responsible for annual gains of between $1,260 and $2,040 for the average family of four, and buttressed the economy by as much as $108 billion a year -- a clear illustration of the contributions of even freer trade.
- Deregulation initiated by President Ronald Reagan has added a half a percentage point to GDP every year, economists estimate -- with the prospect of further gains from future deregulation.
All these measures would be useful even in a robust economy, but the consensus is that this post-slump economy will grow 2.5 to 3 percent a year, less than half the size of a typical post-World War II recovery.
Source: Editorial, "Other Stimuli," Investor's Business Daily, March 5, 2002.
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