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Jewish World ReviewAug. 2, 1999 / 20 Av, 5759

Tony Snow

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Econophone

Keeping what we earn

http://www.jewishworldreview.com -- IF YOU WANT to get a rise out of a politician, utter the following sentence: "We ought to keep what we earn."

Nothing disrupts a pol like the presumption that your money isn't his, which is why honorables go apoplectic at the mention of tax cuts.

Republicans want to cut Americans' tax burden by $800 billion over the next decade. President Clinton brands the idea an assault on women -- a topic in which he is said to have some expertise. Vice President Al Gore, echoing the 1996 presidential campaign, labels it a "risky scheme." And Democratic leaders in both Houses warn the economy could explode if working people start heading home each week with extra cash in their wallets.

Given the dire predictions, let us examine in more detail the primary arguments against taking less of our money.

Begin with the claim that Congress must set aside cash to retire the national debt.

This sounds nice, but let's face facts: In Washington, there is no such thing as unspent money. Members of Congress, in their zeal to make life better for us all, invariably find ways to consume every last farthing. The only reason we have a surplus today is that politicians didn't expect it.

The political class honors the dictum that pelf is power. Even though Washington generates almost no industrial output, the town and its environs enjoy an average income 32 percent higher than the rest of the country (as of 1990) and an unemployment rate 30 percent lower. Ohio University economist Richard Vedder attributes the area's affluence to "successful bureaucratic efforts to redistribute income from the general taxpaying public ... to the political center." No kidding: Since 1950, the government's take as a portion of gross domestic product has jumped 61 percent.

So what happens when a surplus appears? Politicians devour it. Vedder and his Ohio University colleague Lowell Galloway have studied government budgets since 1789 and discovered the following: In the 50 years, 74 cents of every surplus dollar has gone for new spending; 21 cents for debt reduction and 5 cents for tax cuts. President Clinton is proposing to use the entire projected surplus on new spending, so national debt will grow more under his plan than under the Republican tax-cut schemes. This raises the question: If he's so worried about the debt, why is he increasing it? And if he's so concerned about profligacy, why is he encouraging it?

Next argument: The sky will fall if Congress cuts taxes. In truth, the Republican proposals are pitiful little things. The government will grant only 1 percent relief for the next couple of years, then 1.5 percent for a few years -- with a full 10 percent reduction delayed for a full decade. In other words, the real reductions may never arise. (When is the last time Uncle Sam remembered a 10-year-old promise, let alone honored it?)

Still, a little is better than nothing. Federal Reserve Board Chairman Alan Greenspan has testified twice this week that he'd like to see Congress hold off on cuts, just to make sure the surpluses persist. But he also said if honorables must choose between new spending and tax cuts, he'd take tax cuts. He singled out the president's health-care plans as especially ill-conceived.

Democratic Sen. Robert Kerrey puts the matter bluntly: "To me," he says of the GOP tax cut, "this is a no-brainer. It increases Americans' income by $800 billion.

"The president's always saying he wants to increase people's income. Well, here's his chance. He's not interested in this. He wants to spend it."

Finally comes the president's warning that the GOP tax cut will hurt women. This argument involves amazing audacity. The president bases his accusation on the fact that he has proposed a Medicare reform and Republicans haven't. Since more women are on Medicare than men, the theory goes, Clinton does better by the distaff sex.

Consider the mathematics of the president's prescription drug program: To get the maximum government "benefit" of $1,000, a person must pay what amounts to a $1,000 premium plus $288 in new taxes. In other words, one must pay $1,288 to receive help worth $712 -- not exactly a great deal. Once one breaks the $2,000 barrier for prescription costs, the government stops helping altogether. By the way, 59 percent of the "beneficiaries" of this scam are women.

The debate over tax cuts hinges on a simple question: Who owns your work, you or the president? In voting on taxes, Congress must decide whether to support the parasitic culture of Washington life -- taking something and delivering nothing -- or acknowledge that wages rightfully belong to the people who actually earned them. That, to quote Kerrey, ought to be a no-brainer.

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©1999, Creators Syndicate