Tax cuts or public investment?

[David Gleicher <104201.2301@xxxxxxxxxxxxxx>]

> modification of the U.S.'s fiscal stance to a budget deficit of 2.5% of
GDP is hardly reason to expect default, if that is what you are implying.
You don't have to be chartalist or a supporter of functional finance, even
a deficit dove position of Eisner or
Heilbroner and Bernstein would support that.<

As one who more or less takes the same position as Eisner on these matters,
I agree with the point made here.  On the other hand, I fail to see the
justification for huge tax cuts as the form of a stimulative fiscal
policy, as I think Matt is advocating.  In the US anyway there are crying
needs for public investment (and therefore savings) in the areas of
health, infrastructure, the environemnt, education, occupational saftety
and so on.   The only tax reductions it seems to me that make sense right
now are increases in the Earned Income Tax Credit program, since these
achieve in an efficient way much needed income redistribution.

On a couple of related notes, did anyone notice Greenspan's clear
statement, at one of the recent Congressional hearings, that there is no
known way to measure the money supply, and therefore monetarism (while
theoretically correct, he hastened to say) cannot actually be practiced by
the Fed.  There is an irony here that the Friedmanite empiricist
epistemology seems to he hoisted on its own petard.  If there is no
meaasurement of the money supply, how can it be the object of 'scientific'
inquiry?  In particular how can one assert a connection between money
supply and inflation when you can't test the relation?

Second, I'm surprised no one has mentioned (or have I missed it) the weird
reversal of the economic stances of the two political parties.  Bush in
particular makes an unapologetic Keynesian argument for his tax cuts, while
the Democrats by and large urge increases in national savings, in the form
of paying down the national debt.  What does this say about the relation of
Truth to Power I wonder?

DG