Jewish World Review Jan. 30, 2002 / 17 Shevat, 5762

Jack Kemp

Jack Kemp
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Consumer Reports

Just the facts -- AS a rookie columnist, I have always tried to be fair in recognizing good ideas, whether they come from Democrats or Republicans, and when I criticize what I believe to be ill-considered ideas, I do so on substantive grounds so as to avoid making ad hominem attacks. So I was disappointed to hear Democrats make false claims about us returning to an era of deficits and fiscal profligacy when the Congressional Budget Office reported that it was reducing its 10-year budget surplus projection from $3.4 trillion to "only" $1.6 trillion.

First, CBO projections are seldom accurate. Second, projected deficits last for only two years and amount to a paltry 0.16 percent of a $10 trillion-plus GDP. That, folks, while not a surplus, is a budget in balance within rounding error.

Senate Democratic Leader Tom Daschle and Michigan Sen. Debbie Stabenow went beyond the bounds of acceptable political hyperbole, making one of the most partisan attacks on President George W. Bush I have yet heard. The distinguished senators accused Bush of putting Social Security "at risk" with his tax cut the same way Enron executives cashed out their stock at the expense of employees' retirement funds.

This was not only a personal attack on the president, it was also a shameful distortion of the facts calculated to prey upon the fear and vulnerability of Social Security recipients, of which I am one. Stabenow said, "There's a real feeling that this (tax cut) is a lot like Enron, where the folks at the top take their money out and leave the middle-class taxpayers paying for it through their retirement funds and loss of 401(k)." Daschle was even more brutal: "I don't want to 'Enron' the people of the United States. I don't want to see them holding the bag at the end of the day, just like Enron employees have held the bag. I don't want to destroy their Social Security system."

Here are the facts, dear reader. You decide.

1998 - Contrary to CBO's forecast of slow economic growth and 10-year budget deficits of $2 trillion, the economy grew by 4.3 percent, and a $69 billion surplus emerged as a consequence.

January 1999 - CBO reversed its projection of a decade of deficits to a decade of surpluses - $2.3 trillion worth to be exact.

January 2000 - CBO raised its 10-year surplus projection to $3.5 trillion.

Summer and fall, 2000 - George W. Bush campaigned for president on the promise that he would spend $1.3 trillion of the projected $3.5 trillion surplus to cut tax rates across the board. Voters thought a $1.3 trillion tax cut combined with $2.2 trillion in budget surpluses sounded about right and elected him to the Oval Office.

January 2001 - While President-elect Bush and Vice President-elect Dick Cheney were warning of an impending recession and smaller surpluses, CBO hiked its projected 10-year budget surplus to $5.6 trillion.

June 2001 - With significant Democratic support, a $1.2 trillion tax cut was signed into law, in large part because it had become clear to everyone that the economy was in trouble.

August 2001 - Factoring in so-called "revenue loss" due to the recently enacted tax cut and accounting for the slowing economy, CBO reduced its 10-year surplus projection to $3.4 trillion, bringing it back down to virtually the same level it had projected in 2000 without tax cuts.

January 2002 - With the economic recession well under way and the government confronting the need to make large new expenditures in the aftermath of the Sept. 11 terrorist attacks, CBO reduced its 10-year surplus projection to $1.6 trillion. Twenty-nine percent ($514 billion) of the $1.8 trillion surplus reduction is attributable to an increase in discretionary spending, 71 percent ($1.3 trillion) is attributable to the recession. None of the reduction in the projected surplus since last year is attributable to the tax cuts. None. Nada. Zip.

Footnote - CBO projections continue the past practice of underestimating the degree to which economic growth historically has generated growth in revenues. Based on CBO's own economic assumptions, if revenues grow relative to GDP as they did historically since 1986, projected surpluses will actually amount to $3.6 trillion during the coming decade.

Make no mistake about it, economic growth produces surpluses, recessions cause deficits. And if you want to soak the rich, lower tax rates. When we did in 1981 and again in 1986, the income tax paid by top 1 percent rose from 17.6 percent in 1981 to 27.5 percent in 1988. It's time to soak the rich again.

Jack Kemp is co-director of Empower America and Distinguished Fellow of the Competitive Enterprise Institute. Comment by clicking here.


01/22/02: 'Been down so long it looks like up to me'
01/15/02: Confronting terror wherever it occurs
01/09/02: Daschle's war on Bush
01/03/02: Prosperity policies, not partisan politics
12/27/01: Governments create calamity, markets get the blame
12/18/01: 'Tis the season for Daschle to compromise
12/12/01: Hard choices made simple
12/05/01: Straight talk on Iraq
11/28/01: Not all tax cuts are created equal
11/20/01: Words have consequences
11/15/01: Deflationary recession
11/07/01: Consider Mideast reality in the war on terrorism
10/30/01: No 'stimulus' required
10/23/01: Good out of evil
10/16/01: Watching Iraq
10/12/01: The putrid stench of evil
10/04/01: Trade, terror and truth
10/01/01: Drive this scourge from the face of the Earth
09/25/01: Bush emerges as leader for his time
09/06/01: Middle East Madness has a chief instigator
08/30/01: It's about economic growth, stupid!
08/22/01: Phlebotomizers at the IMF
08/17/01: The Greenspan Recession
08/08/01: From Kyoto to Bonn, no science equals nonsense
07/25/01: Fiddling while the world economy freezes
07/19/01: Schundler should be New Jersey's next governor
07/12/01: Second wind for the global economy
07/06/01: An interest-rate target with no bull's-eye
06/28/01: Tax harmonization --- American-style
06/21/01: Warming diplomacy --- at what price?
06/13/01: A party that stands for nothing deserves to lose
06/07/01: No peace in the Middle East
05/30/01: Jeffords' palace coup
05/24/01: A supply-side energy plan
05/16/01: Getting Lincoln right
05/10/01: A good reason to borrow
05/01/01: Supreme Court makes racial profiling the law of the land
04/26/01: Campaign finance reform: silencing the lambs
04/17/01: Right wanted might in China case
04/12/01: How minority entrepreneurs can save the tax cut
04/04/01: Whose privacy is it?
03/29/01: A letter from Seoul
03/20/01: Ignore the double talk and double the tax cuts
03/13/01: Don't give up the bully pulpit on Social Security, Mr. President
03/06/01: Another attack on the economy
02/28/01: It's time to end deflation
02/21/01: Building blocks of humanity
02/15/01: Trumping the propaganda
02/06/01: The Gipper at 90
01/30/01: Kicking off a season of economic growth
01/24/01: The Bush tax agenda
01/17/01: Debating the Clinton legacy
01/10/01: No need for another Social Security commission
01/03/01: Truly a Golden Age, if we can keep it
12/27/00: The Grinch who turned off the holiday lights
12/20/00: Forging ahead
12/13/00: A new tax system for the 21st Century
12/07/00: Global government in retreat
11/30/00: An open letter to Fed Chairman Alan Greenspan
11/21/00: Don't forget the guy in charge
11/15/00: Civic virtue, civic vice
11/08/00: Memo to the president-elect
10/31/00: Scare tactics won't work
10/24/00: Prosperity in the balance
10/11/00: Al Gore's economics of fear
10/03/00: Al Gore IS debatable
09/27/00: Government should protect our online privacy
09/13/00: The most important issue
09/05/00: Defeating the Gore blitz
08/29/00: Workers of the world, rejoice
08/22/00: Just the facts, Mr. President
08/08/00: Reclaiming Lincoln's legacy
06/23/00: A renaissance for urban America?
06/16/00: Capital access can bridge 'digital divide'
06/08/00: Some friendly advice for Rick Lazio
05/26/00: Is the economy being saved or destroyed?
05/22/00: Immigration and the promise that is America
05/12/00: Stock market roulette or snobbery?
05/04/00: Is Rule of Law whatever we say it is?
05/01/00: Myths happen

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