January 24, 2002

Bredesen's Right

Phil Bredesen, the leading Democrat candidate for governor in Tennessee, says the cause of Tennessee's budget deficit is, in fact, unsustainably large spending growth. During the long economic boom of the 1990s, Bredesen says, state government joined many businesses in forgetting there is still a business cycle.

Bredesen tells an audience in Greeneville, "We're a low-tax state," adding that voters seem to want that to continue and for state government that means "we have to have discipline." Bredesen singles out TennCare spending, including a rich benefit package that is far better than most people get through their private or employer-sponsored health plans, as a leading cause of the state's budget mess.

January 02, 2002

"We may have hit bottom"

"We may have hit bottom here, to some extent. We're facing two quarters - the fourth of 2001 and the first of 2002 - of close to zero growth. But this may be the first recession we've gotten through without two quarters of consecutive shrinking gross domestic product." - Lara Rhame, economist, Brown Brothers Harriman.

Tennessee's Chicken Little, University of Tennessee economist Bill Fox, contends that rising consumer confidence in the economy won't translate into higher spending. Of course, as one of the state's biggest cheerleaders for a state income tax, Fox can't afford to admit the economy's improvement might lead to higher sales tax revenues - he's been working so hard to convince lawmakers, the media and taxpayers that the state is rushing toward huge deficits and needs an income tax.

Compare what Fox told The Tennessean in late December with what other economists are saying:

Fox: "People are saying they feel better about the economy, but I don't think that will translate into higher consumer spending in the near term."

Sung Won Sohn, chief economist at Wells Fargo & Co.: "Consumers are once again feeling better and will become the locomotive pulling the economy out of the current recession."

Lynn Franco, director of the Conference Board's Consumer Research Center: "Consumers' short-term optimism is no longer at recession levels, and the upward trend signals that the economy may be close to bottoming out and that a rebound by mid-2002 is likely."

Joe Liro, economist, Stone & McCarthy Research Associates, a financial-markets research firm: "The U.S. economy is often a thing of beauty as it comes out of recession and renews expansion. We expect to see such a transition during 2002's first half, leading to very strong growth by year's end."