Tapping the Economic Brakes

   As expected, the Federal Reserve Board boosted interest rates a notch to prevent the U.S. economy from racing to an unsustainable growth speed.
   The Fed decided to raise its target range for the federal funds rate -- its key rate to the largest borrowers -- to 1.25 to 1.5 percent.
   Separately, the Fed estimated the national economic growth rate, as measured by Growth Domestic Product (total output of goods and services), to be 2.5 percent in 2018.
   This contrasts with the president's announced hope that GDP with "rocket" to a growth rate of more than 3 percent, and the administration is hoping to touch that off through massive tax cuts in a plan now moving through Congress. 
   Delegates from the House and the Senate have reportedly reached a compromise on their versions of the tax reform bill, with a final vote perhaps next week and delivery to the president for his signature by Christmas.
   Whether that happens or the bill is blocked by Democrats remains an open question.
   Separately, economists are generally agreed that such a tax plan, to sharply cut taxes in the hope that this will fuel an economic takeoff, won't work, but will only fatten the purses of those who already have full wallets.
   In addition, there is the likelihood that the Federal Reserve will step in to boost interest rates sharply to prevent the economy from accelerating too quickly.
   In any case, even if the Republican plan moves forward, it will be several months before its effects, if any, can be measured. In turn, that means the Fed would be unable to act until then.
   Meanwhile, consumers are faced with sharp increases in insurance premiums and other expenses that take effect with the start of a new calendar year.