Cutting Debt is Key Component to Tax Cuts
The debate on tax cuts continued to rage when Treasury Secretary Lawrence Summers said this week that reducing the Federal debt was the only way to continue maintaining a strong economy.
Although it is widely expected that President Clinton will veto the recommended $697 billion tax cut passed by Congress last month, Summers believes that reducing debt is important to a tax cut for families because a reduction lowers interest rates while increasing investments. As a result, jobs are created.
The recommended Republican tax cut prescribes cuts of 50 percent or greater in domestic non-defense discretionary government programs. Summers is concerned that large tax cuts could facilitate reductions in key government activities or Social Security and Medicare.