Stock Market Plunge and Bush’s Tax Cuts

* Given that the Nasdaq and Dow are in a free-fall, when may we expect to hear some words of encouragement from President Bush? When similar troubles were felt in 1997, President Clinton, for all his faults, at least took the financial health of the average citizen seriously and reminded the public of the inherent strengths of the American economic system. Instead of capitalizing on the pain of the average investor to push through a tax proposal that caters to the extremely wealthy, Bush could better serve the nation’s interests by signaling that he is ready and willing to get a compromise proposal through Congress as soon as possible.

With the staggering capital losses mounting, fueled in part by Bush’s negative outlook and talk of recession, there won’t be much of a tax base left to cut.

CHARLES SWAGMAN

Los Angeles

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Opponents of Bush’s across-the-board tax cut claim to be concerned about the “irresponsibility” of setting tax policy based on the projected size of the federal budget surplus over the next 10 years.

The revenue assumptions of the president’s tax cut plan are based on an average annual increase in gross domestic product of 2%. Over the last 30 years, annual GDP growth has averaged just under 3%--which includes a decade of stagflation and four genuine recessions. The only 10-year period in which growth averaged less than 2% was 1929-1939--the Great Depression. The economic assumptions underlying Bush’s tax plan thus include a safety margin of approximately 50%. The revenue assumptions under which it is proposed that Americans’ tax burden be reduced from an unprecedented peacetime high flirt with excessive timidity.

THOMAS J. EASTMOND

Costa Mesa