PT1.S4.Q05 - senator strongwood reported that

Michelle H.

Hello, could anyone explain to me why the answer is B and not A. Isn't the argument centred around reduction in capital gains tax and how they would lead to increase in deficit?

GrecoRoman

So there were two studies cited in the stimulus; one that concluded that lowering capital gains tax would increase the deficit, and another that concluded the opposite. The senator then goes on to conclude that plan to reduce that capital gains tax won't pass because of the results of his new study. In doing this he assumes that other senators will trust the study that concluded that the capital gains tax reduction would lead to an increase in the deficit, despite the fact that there was another study concluding the opposite. He just assumes people will trust the study done by his party rather than the other potentially equally and compelling study.

akistotle

Administration: (reduction in the capital gains tax) and /(increase in the federal deficit)
Senator’s party: “reduction in the capital gains tax —> increase in the federal deficit”
Senator: “cutting taxes --> losing revenue"

Senator: The administration’s plan (reduction in the capital gains tax) is now dead. Why? Because he thinks no one votes to increase the federal deficit.

What he assumes is that everyone believes Senator’s party’s study NOT the administration’s study. That’s why (B) is correct.

(A): “increase in the capital gains tax” —> “decrease the federal deficit”
He doesn’t imply this. He only thinks “reduction in the capital gains tax —> increase in the federal deficit.”