The Deficit Reduction Industry
Fossedal, Gregory A.
Gregory A. Fossedal is an editorial writer for the Wall Street Journal and co-author (with Daniel O. Graham) of A Defense that Defends, published last month by Devin-Adair,...
...America is getting ready for baseball, but Washington has found its own pastime, and its name is "deficit reduction plan...
...Such a policy would be disastrous for employment, incomes, profits...
...Listen to the Democratic Caucus, for example: "During the next 20 years, the Medicare program is projected to accumulate a debt of $1 trillion...
...Treasury estimates that at best one fourth of the spending revisions were achieved, most of them caused by a fall in interest on the national debt that could just as easily be credited to a saner Fed policy beginning in August 1982...
...and the bailout of big banks through the International Monetary Fund-cutting such items is easy to justify in terms of equity, and, as Fred Barnes has noted in these pages, would be supported both by populist conservatives and by help-the-little-guy liberals...
...The first is Richard Rahn's study for the Chamber of Commerce, one of the few succmct papers (16 pages), and one of the only ones to note that it is government~ spending, not "deficits" per se, that crowds out private economic activity...
...and even George Will takes time off from mundane pursuits--misinterpreting the Burkean position, properly understood, on taxationuand writes his annual Chicago Cubs column...
...I f the specialists who write these plans intend them to be read by their colleagues at the Office of Management and Budget or Congressional Budget Office--CBO, by the way, offers a three-volume set on red-ink reduction--then they are in for a disappointment this year...
...Walter Mondale says he can save $10 billion from the program using "better management...
...Bill Bradley, talking about his modified fiat-tax bill now before Congress...
...But this places the deficit barely in the top ten of their worries, still behind seven other conditions including inflation, unemployment and "the nuclear arms race...
...Oh, yes, well, we're taking a close look at that, as you know...
...Even if so, it leaves aside the crucial question of how much growth can reduce the deficit--by half...
...Tomorrow, Ronald Reagan will deliver his State of the Union talk," Hollings told the Association for a Better New York on January 24...
...Finally there is a press release issued on March 2, 1983, which reads: "Senators Daniel P. Moynihan and Gary Hart today proposed a new plan for economic growth that would a c h i e v e . . , lower unemployment.., and lower federal budget deficits" than Reaganomics...
...CBO's estimate of the deficit for fiscal 1988 has grown since passage of TEFRA...
...Democratic cuts in social welfare are "taking a look" at "better targeting...
...That is the question posed by Irving Kristol in a recent column on what he accurately calls "the Volcker deficits...
...Interestingly enough, not one of the 25-plus deficit reduction plans surveyed recommends a balanced budget...
...The uncritical acceptance of aggregate budget figures by the mass media, policy makers, and citizens alike is wholly unwarranted," the study concludes...
...LUKACS: But you said just a moment ago that I"m exceedingly quaint...
...congressmen at that...
...twothirds...
...By contrast, Republican Rudy Boschwitz's plan for a "fair play budget" calls for continuing nominal growth in the agriculture program...
...Monetary reform was first delayed, with advisers Suggesting a "gold commission" be appointed to "explore" the idea further, and finally abandoned, as supply-siders were shut out of monetary policy-making positions at Treasury and OMB...
...David Stockman's attempts to rein in agriculture programs have met with little enthusiasm in the White House...
...Efforts to narrow the deficits in a vast frontal assault on individual spending items, Stockman wrote, were worth a try, "but if this is the primary or exclusive focus of the initial fiscal package, the ball game will be lost...
...On my desk is not the usual pile of tennis balls, fishing tackle, and warm ale, but a stack of reports from think tanks, congressmen, former Treasury Secretaries and Federal Reserve Chairpersons, and even a bipartisan commiss{on...
...Reagan may be cutting a deal with Senate Republicans, who may in turn be working with Dan Rostenkowski and other House Democrats...
...Kemp probably has the political emphasis about right...
...the deficit would remain...
...officials, and U.S...
...Instead, he argued, the key to reduced deficits was: 1. resisting efforts to water down the tax cuts, and 2. restoring credit and capital market order "by supporting monetary policy reform...
...Reagan is asking...
...Firing Line," January 18, 1982...
...But don't look for Gary Hart to drop out of the race for Reagan's job, or for anyone else to stop wailing about the deficit, in the 12 THE AMERICAN SPECTATOR MAY 1984 WASHINGTONmSpring is a golden time here, particularly in a presidential election year...
...it would take a shopper this-or-that many years to spend that much money at the rate of $50 a minute...
...Collectively, they are part of the growing charade called "the budget process"mwhich is, of course, neither a budget nor a process...
...In sum, a $200 billion deficit reduction over three years, almost exactly what the House Democrats say will "enable" Volcker to cut interest rates to their historic levels...
...Suddenly, Gary Hart is telling the New York Times we need a drastic revision of support for poor, handicapped, sick, and aged, and another (late) presidential aspirant, Fritz Hollings, is railing at the phony numbers game that goes on with proposals to control the "uncontrollable" machinery of COLAs that drive up spending automatically...
...3. "Lower tax rates stimulate work, savings, and investment...
...Even to discuss such terms as "the deficit," much less plans for its reduction, one must grasp that what we are actually talking about is the fiscal equivalent of plasma...
...None of the large think tanks has attempted to come up with a total corporate welfare figure per se, but the Congressional Budget Office recently published an excellent study on the matter, "Federal Support of U.S...
...Of the many studies, three stand out for putting this whole issue in perspective...
...nor gas, in which particles move so quickly that identifiable elements no longer exist--just a soup of protons, neutrons, and free electrons...
...Neither Dale, nor the CBO press office, nor aides to Robert Dole or Pete Domenici were familiar with the Brookings Institution's annual "Setting National Priorities" critique...
...the two twentieth-century heroes o f Hugh Kenner were Ezra Pound and Buckminster Fuller...
...The CBO ticks off a list of entitlement options and five-year savings as cold-hearted as anything Dave Stockman ever dreamed of: "Require states to contribute to food stamp benefits--S5.6 b i l l i o n . . . Increase the waiting period for Social Security Disability Insurance--S150 m i l l i o n . . . Eliminate veterans' compensation payments fox those with low-rate disabilities--S6.6 bill i o n . . . Two-week waiting period for unemployment compensation--S3.8 b i l l i o n . . . Index the unemployment insurance taxable wage base--S9.4 billion...
...A reporter asks Ed Dale, OMB's press spokesman, to name three of the independent studies on the deficit: " I really couldn't, right off hand...
...A 1983 Treasury Department survey of the available literature concluded there is almost no support for the "crowding out" theory of interest rates beyond editorial pages and deficit-reduction plans...
...Suppose, further, that this generated 2 percent growth in nominal GNP, a modest enough number...
...But he assumes that any reduction of unemployment below 7 . 5 percent can only be achieved through higher and higher inflation...
...2. Walter Heller's 1963 Economic Report of the President, discussing the Kennedy tax cuts...
...You may now add John Lukacs to the ranks of George Will, Peter Viereck, and all those who challenge the right of a certain President, a certain political party, and a certain journal of opinion" to call themselves "conservative...
...Ronald Reagan had it right two years ago when he asked a group of economic advisers what difference it made on credit markets whether government snatches its money through taxation or borrowing...
...One is agriculture subsidies, a program that has ballooned from less than $8 billion under Jimmy Carter to more than $20 billion under Ronald Reagan...
...The tax cuts were delayed and weakened such that there was no real tax relief until 1983...
...Jeffrey Hart, the chief editor o f National Review, wrote in 1982 that American conservatism amounted to American modernism: that the progress o f technology, the breaking away o f modern literature and modern art from all traditional forms, and the new loosening o f the family and sexual mores were matters that American conservatives should welcome, indeed, that they should espouse...
...Congressmen Miller, Mack, AuCoin, Solomon, Guarini, Coleman, Studds, Dorgan, Dixon, Hansen, Fuqua, Archer, Shumway...
...Any others...
...Rudy Penner at CBO searches for a full employment deficit too, and concludes that growth can do little to achieve it...
...Apparently, the Laffer curve only works when there is a Democrat in office, but as economist Alan Reynolds comments: "Keynesians always believed in the Laffer Curve...
...No...
...It would be fascinating to trace the history of some cuts...
...Perhaps some Washington think tank--or maybe Ronald Reagan, or Gary Hart or Walter Mondale--will want to address that question in the near future...
...2. "Because tax revision will raise incomes, it will also raise tax revenues, through a 'feedback effect' out of the expanding tax b a s e . . . By reducing taxes, stimulating cost cutting investment, strengthening incentives, and promoting a more efficient allocation of productive r e s o u r c e s . . , a balanced tax p r o g r a m . . , lays a firmer foundation for continued price stability and an improved competitive situation in world markets...
...Well, President Reagan's Grace Commission, for example...
...In fact, the bill was supposed to render $98 billion in revenue enhancers and another $270 billion in spending reductions, narrowing the deficit below $50 billion by 1987...
...Reagan Proposes $8 billion in Social Spending cuts.' " People lilce Stan Evans, Pat Buchanan--' indeed, Reagan himself--have been writing columns about this for years, so there would seem to be nothing in the way of a bipartisan compromise to slash entitlements...
...They must wake up in a cold sweat and ask themselves, 'How did we get stuck with this as our leading issue?' " Is reduction of the deficit an end.in itself, or merely one of several tools for achieving economic growth...
...But wait a minute...
...He's from Minnesota...
...But, the consensus has it, a $200 billion cut over the same period would do wonders, reviving the stock market and "enabling" Paul Volcker to cut interest rates without "reviving fears of inflation...
...The record is not impressive...
...By calculating what would happen if we achieved paltry 2.9 percent increases in GNP and labeling this a "high growth" estimate...
...A sure tipoff is that economists at the CBO, Dole's office, and OMB have not even bothered to estimate where the cuts occurred and where the revenues came in...
...I'm not sure what you're talking about...
...David Stockman may have forgotten his now-famous paper, "Avoiding a GOP economic Dunkirk," but its coauthor--Congressman Jack Kemp-has not...
...Dale says, "but do we have time to go through the Heritage Foundation or the Brookings Institution line by line...
...the other half wants to know if Konstantin Chernenko listens to jazz...
...The Grace Commission locates more than $4 billion in savings without even going after the big-ticket price support and marketing orders programs...
...Three points off the interest rate would remove $100 billion in federal interest payments over three years, and the additional economic growth, using OMB's rule of thumb for such matters, would save $60 to $100 billion by bringing in new revenues and reducing spending on such programs as unemployment insurance and food stamps...
...Another surprise is the degree to which the deficit reduction plans are willing, in the political vernacular, to "look a t " entitlement programs...
...But the Post doesn't even mention this...
...Sure, most of it going to "the rich...
...But even a quick skim through the budget reveals their pervasive influence...
...My own inquiry locates an OMB official familiar with the 1984 Heritage study, which, interestingly enough, draws heavily on the Grace Commission and CBO efforts, which in turn drew somewhat on a 1982 Heritage study on "Cutting $110 billion" from the federal deficit, which in turn was based on an earlier series of Stockman "menu cuts" implied in the 1981 budget submission but never sent to Congress...
...The one thing that is certain in the deficit-reduction world is that nothing is certain...
...Disparate as they are, the deficit reduction packages nevertheless do agree on a number of points...
...Attempts to raise taxes "would be largely selfdefeating...
...Senators Eagleton, Garn, Trible, Melcher, Johnson...
...He laboriously searches, in this essay, for contradictions and paradoxes in the nature of the pre-1945 American isolationism that after 1945 became antiCommunist internationalism, and comes up with many interesting a~cusations--and denunciations: Their view of the worlcl and their consequent advocacies of foreign policies were lamentable, since their view of the Soviet Union as the focus of a gigantic atheistic conspiracy and the source of every possible evil in the world was as unrealistic, unhistorical, ideological, and illusory as the pro-Soviet illusions of the former liberals and progressives had been...
...Its finding: more than $60 billion in direct expenditures and credit arrangements, some of which don't even show up in the federal budget, plus some 14 programs--such as housing subsidies and medical programs--with "significant identifiable commercial effects, [totaling] almost $300 billion...
...That means cutting the federal funds rate, creating urban enterprise zones, simplifying the tax code and reducing marginal rates, and paring back spending with the line-item veto...
...Joseph Pechman at the Brookings Institution is scrupulously honest about such matters, and only talks about the "full employment, structural" deficit, but the OECD studied that question in 1983 and found the United States was running a structural surplus equal to 1.7 percent of GNP...
...Consider the following three assessments of the impact of large tax cuts on the deficit: 1. "During his election campaign, [the President] promised to balance the budget by [the fifth year of his term], with outlays limited to about 21 percent of Gross National Product in a fully employed economy...
...A panel from the House Democratic Caucus growls about farm subsidies that go largely to the wealthy, and they are right: there are some 2 million farms in the nation, but 70 percent of support payments go to the largest 250,000 private farmers and corporations...
...Then why not cut $300 billion over three years...
...Why have a budget...
...A cover letter explains that the list is "not exhaustive...
...Or put it this way: Were every congressman and senator required to devise his own "deficit reduction plan" for the nation, a modest $350 million cut per district would put the budget in surplus...
...If the country had a dime for every two cents worth of advice on how to cut the budget, there would be no deficit to begin with...
...Unless its expenditures are cut by 30 perc e n t . . , it will go into the red in 1990...
...Chamber of Commerce...
...Weak real GNP and employment growth over calendar 1981 and 1982 will generate soup line expenditures equal to or greater than any static revenue gains from trimming the tax program...
...How about the Heritage plan...
...The real problem, of course, is that liberals like to talk about their willingness to cut, but a concrete proposal to do so would produce just the sort of headline Hollings complains of...
...Half the journalists and the policy analysts and the charisma maximization consultants are out of town analyzing the latest exit poll...
...Government payments to big oil companies for synthetic fuel research...
...Passages from Conscience o f a Conservative leap to mind...
...About two hours of telephone calling produces plans from the Brookings Institution, the Heritage Foundation, Chamber of Commerce, Ronald Reagan's Private Sector Cost Control ("Grace Commission") Survey, the American Enterprise Institute, and several dozen smaller groups...
...Democratic pollster Peter Hart continues to find that only 3 to 5 percent of the voters are concerned about the deficit in any tangible way, and many of them blame Congress...
...Physicists use the term "plasma" to describe a fourth...
...But this year, a dark cloud hovers over the whole enterprise...
...If indeed the bill is worth recalling, and reduced deficits caused the recovery, one would think the Post would give some estimate of the beneficial reduction in deficits caused by TEFRA...
...Buckley was an unquestioning admirer o f Secret Agents, of computerism and nuclear technology...
...Co-sponsored by Trent Lott and Bob Kasten, it reads like a conservative's dream wish: a tax plan that goes further than BradleyGephardt in lowering tax rates and eliminating loopholes, line-item veto, a price-rule reform of the Federal Reserve, enterprise zones, and more...
...The annual quota of tourists arrives to view the cherry blossoms, and for a few weeks bureaucrats are outnumbered by real Americans...
...Outgrowing Democracy, p. 339...
...The ad hoc juggling of numbers--S100 billion has no effect...
...Deficit reduction studies are becoming to Washington what microchips are to Silicon Valley...
...Everyone knows, from the favorable media reception, that Ernest Hollings, Robert Dole, Pete Domenici, Jim Jones, Dan Rostenkowski, and Tip O'Neill have come up with various ways "to do something" about the deficit...
...Each has a specific plan that is the answer for controlling the deficit monster...
...After two years of pounding from the press, a respectable 55 percent of the public voices concern with the "Reagan deficits...
...The World Bank, International Monetary Fund, and Organization for Economic Cooperation and Development havg all suggested some cuts, though the OECD, to its credit, suggests the Europeans stop griping about America's Kemp-Roth and pass one of their own...
...In 1958 a gang in Harlem called themselves "'Conservatives...
...Medicare spending for hospitalization, $3 billion in 1967, is projected to be about $50 billion by 1985...
...Then there is Paul Volcker...
...A $100 billion (over three years) "down payment" cut from Ronald Reagan, everyone seems to agree, would do little to help lower interest rates...
...Of course not...
...Mind you, these are only U.S...
...Dole's staff blames the White House for failing to implement "management savings" called for in the package, and _9 the White House blames Congress for not enacting the requisite spending cuts...
...These volumes alone form a fourteen-foot pile, and they are only the iceberg tip...
...Indeed...
...Under these, food stamp recipients making more than 140 percent of a poverty level income would have their benefits cut off, and students with family income of more than $30,000 would have at least to fill out a form demonstrating need...
...who was the first to propose capping the Social Security Cost of living adjustment at two percent below inflation, or re-defining the "prevailing local wage" clause of the Davis-Bacon act...
...Since cutting interest rates would reduce deficits by the amount described, which in turn is the amount needed to cut interest rates, why not just cut interest rates to begin with...
...Reagan's are "drastic slashes...
...This is a suspect conclusion a t best, unsupported by most serious economic studies...
...By contrast, "George Bush" and "Paul Volcker" ring up less than 400 references, and one of these men is the second most powerful man in the world...
...Robert Bartley, the editor of the Wall Street J o u r n a l , says: "You know, I sometimes think Tip O'Neill and Teddy Kennedy must wonder how they got saddled with this one...
...Wanniski and Roberts note, taxation may be worse, because it crowds out the most efficient--firms making a profit--while borrowing, at least in theory, crowds out the least efficient...
...Earl3/in March, Kemp unveiled his fullemployment plan to a throng assembled at the annual CPAC here (for "Conservative Political Action Conference...
...Remember the flap over Martin Feldstein's memo suggesting a tax on unemployment benefits...
...Twice, they were off by 2,000 percent...
...200 billion will "insure growth" and even allow more spending on "infrastructure," says Gary Hart--is not the only example of doubletalk...
...Why not bring interest rates down the easy way: by bringing them down...
...Supply-side economics" shows up 45 times in the same two months, and the phrase "Laffer curve" pops up only 27 times for the years 1983-1984 combined...
...Well all right...
...In February, lhe nation's governors got into the acf, hoisting up their own ideas about the budget under the leadership of Illinois Republican Jim Thompson...
...In the course of carefully arranging his paradoxes, Lukacs reasons by analogy, comparing the apparent contradiction THE AMERICAN SPECTATOR MAY 1984 15...
...Given the structure of the federal budget, it is almost impossible to identify a total corporate welfare component...
...The policy elite is churning out estimates of "crowding out" and "structural net federal borrowing as a percentage of GNP" in much the same way it used to study "the poor...
...As we go to press, we learn that Mr...
...and 3. Sen...
...90 percent?--and, even more important, whether we can cut the deficit at all without growth...
...Tom Wolfe of fast-flying and fast-living pilots...
...Behind the demonstrations that the deficit is mainly "structural"--i.e., not caused by a weak economy--are economic assumptions, and most are highly suspect...
...On the other hand, John Palffy, author of the Heritage study, reports inquiries from several OMB officials ging to be cut...
...Such a strategy is consistent with significant tax reductions "because economic recovery would generate the necessary margin of additional receipts 9ver built-in expenditure increases...
...The quotations are, respectively, from: 1. The Brookings Institution's 1978 analysis of the Carter budget...
...Gregory A. Fossedal is an editorial writer for the Wall Street Journal and co-author (with Daniel O. Graham) of A Defense that Defends, published last month by Devin-Adair, Greenwich, Connecticut...
...How come...
...Treasury's Steve Entin suggests the $140 billion figure is not yet reliable, but then,, that such projections are unreliable is precisely the point...
...Two figures who receive almost no mention in the deficit literature are Robert Dole and Paul Volcker...
...A good example of this hypocrisy is the Democratic Caucus plan, sprinkled with suggestions that we "do a better job of targeting" programs to the "truly needy," and "consider" whether all,he spending that is "supposed to benefit the poor" really does...
...Item two is a paper from the libertarian CATO Institute which studies the success with which government bureaucrats attempt to forecast future 14 THE AMERICAN SPECTATOR MAY 1984 deficits...
...Yet here is how page 44 refers to the proposed redirection of student loans: "He [President Reagan] tried to cut out $1.8 billion...
...For the first two months of 1984 alone, Nexis finds 506 stories using the specific words "deficit reduction plan," 814 stories with the words " d e f i c i t . . . plan...
...Why have an Office of Management and Budget...
...A friend on Capitol Hill asks the Congressional Research Service to check into the formal "deficit reduction packages" pending action before the House and Senate, and the computer printout merely naming the bills runs several pages, listing 50-plus plans, or one for every tenth member of Congress...
...A story in the March 12 issue of Business Week reports that the deficit is running not at $300 billion, nor at the $180 billion projected by the administratiIln, but at $140 billion...
...Then what is the meaning of passing a deficit-reduction package at all...
...Could you name any...
...Reagan attempted just such retargeting irr 1981, passing new means tests for the food stamp and student loan and grant programs in 1981...
...The Washington Post wrote a February 13 editorial, "Precedent for a Budget Compromise," which praised the Dole bill as "worth recalling," and credited the 1983 recovery on the bill's passage...
...funding of wealthy "charitable" foundations, mostly leftist lobbying groups...
...Many of these documents start with an attempt to illustrate "how big $200 billion is...
...its outlays are ingeniously buried from department to department, line item to continuing resolution...
...More important, though, is that the inverse relationship is almost never noticed: Even granting that deficits cause some intuitive rise in interest rates, what about the irrefutable evidence that higher interest rates cause higher deficits...
...Or Reagan's plan to tick up the Social Security retirement age to reflect a drastic change in life expectancy...
...Heritage would cut $5 billion from the department, eliminating several support programs wholesale...
...state of matter, neither liquid, solid, near future...
...BUCKLEY: No, I'm saying that sometimes you strike me as saying things because it's quaint to say those things, or else you are attaching to them a meaning that is not readily communicated...
...Budget forecasts swung between egregious optimism and unwarranted pessimism, but the average error in forecasting the magnitude of change, up or down, was more than 500 percent...
...the so-called Small Business Administration, chiefly a provider of $100,000-plus loans and guarantees for new shopping malls...
...Or an assortment of spending freezes or caps proposed by Rudy Boschwitz, Newt Gingrich, Orrin Hatch, and a half dozen others...
...Solid money is the way such figures as Alexander Hamilton, Napoleon, John Maynard Keynes, and Jack Kennedy financed tax cuts, so it just might work...
...OMB's Dale speculates that it "would be almost impossible" to figure...
...Heck, why not run a surplus o f $100 billion, "crowding in" lots of money for "private borrowers" to finance capital formation...
...Volcker himself says a $50 billion deficit reduction would lower interest rates one point this year...
...but then the projected deficit for 1985 is not $180 billion but $160 billion...
...All told, Reagan will propose spending increases of about $81 billion...
...Suppose the Federal Reserve were to cut the Federal Funds rate down to 6 or 7 percent, still above historic levels but nevertheless almost a 3-point drop from current levels...
...Other assumptions are no more plausible...
...Almost universally, the deficit reduction papers note that smaller red ink totals would give him "more room" to lower interest rates...
...A crude but interesting gauge of the scope of this unprecedented concern over deficits is provided by the Nexis machine, a computer program that has become a favorite tool of journalists...
...A recent Newsweek poll asked voters to list their top concerns for 1984...
...Not that I know of...
...In seven of the last twelve years, forecasters deviated from the actual percentage change in the deficit by more than 95 percent...
...Business...
...Punch in, say, the words "Tip O'Neill" and the date May 22, 1981, and Nexis will provide a list of every story mentioning Tipster, on the day in question, appearing in such publications as the New York Times, the Washington Post, Time, Newsweek, UPI, AP, ad nauseam...
...Outgrowing Democracy, p. 336...
...Not in particular...
...The scheme, the release said, would reduce unemployment to 7.6 percent, and produce a deficit of $185 billion, "by 1985...
...Indeed, those agriculture subsidies are but one component of a "corporate welfare" budget that is just begon by Exxon or Cargill, $35 billion...
...Research and development," much of it carried said to be crunching his estimates of potential savings through the usual computers and econometric models...
...The January 1984 issue of Harper's carried an essay by Lukacs, "The American Conservatives," ("where they came from and where they are going"), in which he quibbles over whether the word "conservative" is ancient or English or relevant to American traditions, failing to reflect on the fact that in 1980 there was nothing in America for a conservative to conserve, just as in 1815 there had been nothing in France for the original conservateurs to conserve either...
...Few working stiffs would consider 9 million jobless "full employment...
...Really...
...Likewise, CBO "proves" that increased production won't cure the deficit...
...And then, third, there is a paper by David Stockman--the old, supply-side David Stockman, who in a 1980 memo to President-elect Reagan wrote: Fiscal stabilization, i.e., elimination of deficits and excessive rates of spending growth, can only be achieved by sharp improvement in the economic indicators over the next 24 months...
...The answer is, "little," and in fact, as Messrs...
...But did you know there have been at least seven versions of a constitutional tax limitation amendment...
...Would you like to see that...
...As it turned out, neither prescription was followed...
...If you are a person working an hour of overtime, and you know you are only going to keep 50 cents on the dollar, you are less likely to do that than if you are going to keep 70 percent on the dollar . . . . The broad general effect of lower tax rates will contribute to economic growth...
...The zenith of all this activity may come at the Republican Convention this summer in Dallas, where a group of young turk congressmen plan to introduce a goldstandard plank to the GOP platform...
...Individually, these documents contain many interesting ideas and worthwhile suggestions...
...Agrisubsidies, $20 billion...
...Why not eliminate this year's $180 billion deficit entirely...
...For example, according to Gerald Seib, one of the best Pentagon correspondents in Washington, "no one" believes that the administration will achieve its requested increase in defense spending for 1985...
...Most of the nameless officials quoted in the daily press say the actual budget will be something like $20 billion less than Mr...
...A call to his office produces an apologetic explanation from press aide Merrick Carey that "we don't have a deficit reduction plan, just a full employment plan...
...There are currentlyfour different bills to create a bipartisan commission on the deficit, including one from Pat Moynihan~five if you count the joint resolution offered by Senator Baucus "to express the sense of the Congress that a bipartisan response to the growing public debt and federal deficit is necessary...
...I suppose someone in our shop goes over those things," Mr...
...a stack of 200 billion one dollar bills would stretch so-and-so many miles high...
...Housing and medical subsidies carry a huge welfare component and total $110 billion...
...This means that the policy initiatives designed to spur output growth and to lower inflation expectations must carry a large share of the b u r d e n . . . For this reason, dilution of the tax cut program in order to limit short-run static revenue losses during the remainder of FY 81 and FY 82 would be counterproductive...
...Dole continues to grab headlines with his 1984 plans to "reduce the deficit," but his 1982 proposal for doing so--the Tax Equity and Fiscal Responsibility Act, passed that August--has been given little scrutiny...
...Page 50 looks at means tests for income assistance in "human terms": "300,000 families without welfare b e n e f i t s . . . 260,000 families with their benefits r e d u c e d . . . " And all THE AMERICAN SPECTATOR MAY 1984 13 of them making $15,000 a year or more...
...they just look at it from the demand side and call it 'the multiplier.' " Yet today's deficit-reduction packages are almost unanimous in their conclusion that "growth alone cannot tame the deficit monster...
...But a one-point drop in interest rates would cause, almost, a $50 billion deficit reduction over several years...
...But you know what the headline in the New York Times will be...
...It is hard to believe, as the incessant media drumbeat would have it, that stock values, interest rates, and inflation expectations all hinge on the latest forecast for 1988 deficits when the government historically can't even say what is going to happen in the next few months...
...Given the latest numbers, it would seem such a "new plan," namely Kemp-Roth, has already been put in place...
...And this is not a bad way to look at the deficit reduction plans themselves...
...Shall we talk international...
...Bill T. John Jamieson's essay, "'The American Monarchist, "" will appear shortly in the Salisbury Review...
...The wanting appreciation o f tradition among American conservatives was evident not only among some o f their politicians but also among their star intellectuals...
...A few days later, the material arrives, along with an explanatory quotation pulled from a recent Kemp speech: "Deficits are a function of economic stagnation, and a deficit reduction plan should attempt to sustain and increase the rate of economic growth and find ways to increase the number of people working...
Vol. 17 • May 1984 • No. 5
