OCR Text |
Show THE VOICE OF BUSINESS i Lesher answers Broder ii on business onvesvrnenv By Richard L. Lesher President Chamber of Commerce of the United States David Broder, the nationally syndicated columnist, usually leads the pack, rather than follows it, which is why I was surprised to see him sing the familiar "Where are the new factories?" refrain to the business community in a recent column. Mr. Broder suggested that I am . begging the question by claiming that . the President's economic program has not been given sufficient time to work. The plain fact is that we have not yet had supply side economics under the current administration. It is true that Accelerated Capital Cost Recovery (ACRS) provided faster tax write-offs for business effective Jan. 1, 1981. It was made retroactive to that date precisely because Congress recognized that ACRS would require the longest period of any of the proposed tax changes before it would bear fruit. Why? Because even in normal times, business rejuvenates its plant and machinery on the average of only once every seven years and the faster tax write-offs allowed under the new law apply only to new purchases. Moreover, interest rates are stuck high above the rate of inflation, and our industrial sector is operating at only 72 percent of capacity. Thus, simply changing the law does not mean that business will rush out tomorrow and buy new equipment, and no one else claimed that this would be the case. But no amount of business tax relief will have its desired effect on investment without a strong and growing consumer economy. This is why I and other early proponents of a supply side strategy have always argued that sweeping personal tax rate reductions must be carefully orchestrated with both business tax incentives, and more important, with Federal Reserve Chairman Paul Volcker's policy of monetary austerity. Unfortunately, this has not happened. Rather than adopt President's Reagan's original plan for three ye , 10 percent tax cuts beginning fc t 1981, Americans got a measly . percent cut last year, which wasc than consumed by inflation's brat creep and rising Social Security In short the total program got s; "sync" because of inadec. consumer demand. Which make doubly amazing that some people; to tax consumers even more! A plea for time may sound shopworn scaptegoating. But necessity for patience is a direct re of the manner in which Congress e to implement our new economic pi Has the long sought! jevitalization of American pr 'enterprise already happened' course not. Will it happen? Yes! many signs of this rebirth are afe at hand. But our victory wil complete only if Congress and administration put a quick end tc doubts they are creating about wb: we are on this course to stay. |