US Tax Cuts Are Working, Say Chief Executives

by Mike Godfrey, Tax-News.com, Washington

12 August 2003

According to a report from Bloomberg this week, the chief executives of some leading US firms have observed that the $330 billion fiscal stimulus package signed into law by President Bush some weeks ago is now starting to reap rewards in terms of increased economic activity.

"Tax relief is just beginning to be felt in the economy," J.T. Battenberg, chief executive of Delphi Corp., the world's largest auto-parts maker, told the news agency, adding that the benefits of lower taxes will continue to spur the economy in the coming months "as consumers and investors in stocks and bonds get more cash in their hands."

Although the economy does not appear to be recovering as fast as Bush administration officials would like, and the jobless level continues to rise at a steady pace, Larry Gaskins, CEO of L.C Gaskins Construction Co (who was invited to last year's Waco economic summit) suggested that the country was now definitely in recovery. "I really don't know what else they could do right now" to stimulate the economy further, Gaskins told Bloomberg.

However, the President appears to have some more tricks up his sleeve, and announced to reporters last week that "there is still more we can do." Mr Bush went on to cite pending legislation such as $14 billion in tax breaks to the oil, gas and alternative fuel production sectors, and new laws that will curtail frivolous lawsuits.

Most analysts now seem to agree that it is probably more a question of when the US begins to recover in earnest, rather than if. "There's a lot of fuel in the engine, and pretty soon the engine should be firing on all cylinders," Bloomberg quoted Sung Won Sohn, chief economist at Wells Fargo, the US's fourth-largest bank as observing.

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