Budgetprop
Kudlow, Lawrence
Lawrence Kudlow Budgetprop An economist's-eye view of the ruling administration's propaganda-driven fiscal policy. R ather than the tough-decision budget that was advertised, President Clinton's...
...Following the 1990 "budget summit" that was to cost George Bush his presidency, the latest CBO deficit projections through 1996 now show a $394 billion underestimate of the accumulated deficit, and an extraordinary $486 billion shortfall in projected revenues...
...World markets set commodity prices, and businesses will rise or fall on the basis of competitiveness...
...Despite the president's State of the Union pledge to avoid further defense cuts, the budget data show otherwise—at a time when Sen...
...These reports are ideal for distribution to your friends, business colleagues, teachers, and political representatives...
...The day of reckoning came in February, when Robert Reischauer of the Congressional Budget Office (CBO) ruled that "employer mandates" are in fact tax increases (since the proposed regional alliances would operate as agents of the federal government...
...Nearly everyone believes that the total cost of employer mandates, new entitlements, and other subsidies will be far costlier than the White House admits...
...Outdated Government Finance When will Washington wean itself from the legacy of the 1930s...
...Like the successful market reformers in Mexico, Argentina, Asia, and Central Europe, the U.S...
...Clinton's budget is full of stunts—governmentsponsored supercars, information superhighways, re-funding failed industrial programs such as the National Institute of Standards and Technology and the Advanced Technology Program—that are a throwback to the 1930s...
...the preliminary 1992 Treasury report shows sales of a paltry $70 billion...
...Sam Nunn and others believe that defense spending must be raised by at least $20 billion...
...In fact, from a 1988 bottom of 3.6 percent, the domestic discretionary spending share of GDP will increase to 4.2 percent or more by 1995...
...However, the recovery cycle beginning in late 1982 had generated 7.9 million new jobs at a comparable point in time, and the 1975 recovery 7.2 million...
...Meanwhile, incoming Defense Secretary William Perry seems eager to turn the DoD into a lab-oratory for a number of failed industrial policy and "technology partnership" programs...
...0 The American Spectator March 1994...
...it has proved conclusively that it cannot operate in these areas...
...From there, at least $20 billion in necessary defense spending has been left out of the budget—and is going to have to be paid for somehow...
...When the capital-gains rate was raised from 20 to 28 percent, the CBO predicted a rising arc of government revenue collection from capital-asset sales...
...History has taught us that entitlements have a way of spiraling out of control: When Medicare was created in the mid-1960s, actuaries predicted $9-12 billion costs by 1990...
...Finally, all domestic entitlement programs must be overhauled to disempower bureaucracies, with their antiquated administrative bottlenecks...
...The 1993 tax surcharge, lifting the top rate to 40 percent, should be repealed...
...Daniel Wattenberg's profile of the real Hillary Clinton...
...R ather than the tough-decision budget that was advertised, President Clinton's latest fiscal plan is nothing more than a thinly veiled deception that attempts to cover up a further trashing of defense, an enormous tax increase, and the creation of numerous new entitlements...
...In other words, higher' taxes generated lower revenues and wider deficit gaps...
...It is twenty-five years of Medicare and ACTUAL & TREND REAL GDP ANNUAL LEVEL 1988 1989 1990 1991 1992 1993 Actual --41— 3% postwar trendline SOURCES: COMMERCE DEPT...
...Box 549, Arlington, VA 22216-0549 Yes, please send me: copies of James Ring Adams "Beyond Whitewater" $ copies of John Corry's "The MIA Cover-Up" $ copies of Michael Fumento's "This Magic Moment" $ copies of David Brock's "The Real Anita Hill" $ copies of Daniel Wattenberg's "Gunning for Koresh" $ copies of Daniel Wattenberg's "Lady Macbeth of Little Rock" $ copies of Terry Eastland's "Rush Limbaugh: Talking Back" $ copies of Michael Ledeen's "Lawrence Walsh, Grand Inquisitor" $ copies of "The Incredible Shrinking AIDS Epidemic" $ copies of Lisa Schiffren's "The Unauthorized Clinton Financial Audit" $ copies of David Brock's "Living With the Clintons" $ Total enclosed $ Name...
...The Health Plan Let's look at just the Health Security Act proposed by the White House...
...More generally, after 1986,, a brutal series of tax and regulatory increases undermined the economic growth of the 1980s...
...One: $5 Ten: $35 Fifty: $130 Five: $20 Twenty-five: $75 One hundred: $250 (Quantity discounts apply only to orders for the same report...
...Particularly ballyhooed was the administration's deficit estimate of $165 billion fiscal year 1995, a precipitous drop from the $235 billion forecast for FY94...
...As Federal Reserve chairman Alan Greenspan warned recently, merely financing a government takeover of the U.S...
...Subsidies for farm and dairy price supports, housing, electrification, and waste-water treatment...
...eliminated deductions and, exemptions...
...Growth is crucial, and capital crucial to growth...
...And the middle class should receive the benefit of a substantially higher family allowance for children and spouse, with an inflation-indexing provision...
...This would create an unprecedented tax burden that would surely drown the economy, and, needless to say, take the whole health-care system with it...
...To reach the goal of 4 percent growth, the current budget should include, at a bare minimum, a return to the old 20 percent capital-gains rate and a commitment to index capital gains to the rate of inflation...
...The government should get out of the land management business, get out of housing and real estate, get out of banking and lending...
...The 1995 budget attempts to fob off an unprecedented peacetime tax increase and a grandiose scheme of social engineering and income redistribution as "change...
...Whether Clinton is capable of generating a rational military budget remains to be seen...
...Any list of deceptions must begin with the absence of the colossally expensive welfare and health care reforms, both of which could begin spending out in FY95...
...Pre-1986 trendline SOURCES: COMMERCE DEPT...
...By 1993, this gap had yielded a growth deficit amounting to $1.3 trillion lost real output, 5.4 million lost jobs, and 1.6 million lost new business start-ups...
...Going forward, President Clinton's new budget predicts 2.6 percent growth over the next five years...
...Such policies, along with vast new entitlement spending, could actually raise the deficit path well above $300 billion by decade's end...
...health system is exceedingly troublesome...
...Government health care spending, pre-reform, is expected to rise nearly four times faster than expected inflation—even as health costs in the private sector level off...
...If successful, this forecast will insure a widening of America's performance gap, and a larger-than-expected budget deficit...
...Tax Hall of Shame Budget projections themselves have an abysmal track record...
...See table this page...
...Michael Ledeen's exposé of Lawrence Walsh...
...Lacking the epiphany that taxes matter, Labor Secretary Robert Reich has successfully negotiated a huge 17 percent rise in his department's employment and training budget...
...In the uncapped area of mandatory entitlements, the next five years will witness projected annual growth of 7.2 percent...
...BEAR STEARNS 5.5 5.4 5.3 5.2 5.1 5 4.9 4.8 4.7 4.6 6.3% gap in 1993 The American Spectator March 1994 29 American Spectator Reprints Available AMERICAN SPECTArTpg The Real Anita Hill by David Block AMERICAN ECIATOR...
...If, in response to the quarter-trillion-dollar tax hike of August 1993, only a tenth of taxpayers Shelter a bit more income, or participate less in the workforce, or invest less money, then both revenues and economic growth will come in significantly below the Lawrence Kudlow is chief economist at Bear, Stearns...
...government should be targeting at least 4 percent growth and 3-million-yearly job increases during the period ahead...
...Clinton boasts of cutting or eliminating 115 programs, but these cuts amount to only .05 percent of the $1.5 trillion budget, hardly draconian...
...energy, airport, and community development block grants—all these should be scrapped completely...
...Few have challenged the Clintons' invention of a private-sector-driven health crisis...
...The fallout from the 1990 tax bill proves it, but the 1986 capital-gains tax hike provides even clearer evidence...
...Making use of IRAs, medical savings accounts, vouchers, and tax credits, will broaden free-market choice for individuals and businesses...
...By 1992, asset sales were expected to reach nearly $300 billion...
...But 1995's estimate is not a real number, and what's left out of it is more interesting than what has been put in...
...Including user fees, the FY 1995 increase in budget authorization in this area comes to 7 percent, or more than twice the rate of inflation...
...Defense as a Cash Cow On the spending side, policy makers have been looting the defense budget to boost domestic program levels...
...In tax terms, the only way such a deficit can be funded is with a doubling of the income tax, about a 15 percent new payroll tax, and a European-style value-added The American Spectator March 1994 27 tax...
...Medicare grows by 10.8 percent a year and Medicaid by 11.8 percent...
...Ignoring failures stretching back to the Kennedy administration, Reich believes that new training money—which comes to $20,000 per targeted student, even before Congress adds its inevitable pork to the bill—will solve the problem of "dislocated workers...
...The net effect has been a substantial slowdown in the U.S...
...CAPITAL GAINS REALIZATIONS IN TAX RETURN DATA 300 150 350 250 g'-a 200 z cn z • 100 .y 50 C) 0 $230 billion gap in 1992 0s0 n CoVe —r• • ,vvect-\ ..•• O • • 00 0 O— N M •:t kr) 00 a, NI 00 00 00 00 00 00 00 00 00 00 a. a. 0, CT, CA ONo a CZ1 CIN as a, (7, 0' El Actual...
...It is perhaps the most embarrassing forecasting miss ever...
...y Clinton's Big Mama by Daniel Wavenbery Copies of James Ring Adams' Whitewater report, John Corry's report on The MIA Cover-Up, Michael Fumento's report on Magic Johnson & AIDS...
...the actual 1990 cost was $107 billion...
...See table, p. 29...
...Thus far, this recovery has generated 2.3 million new jobs, most of them in the last year...
...Finally, the administration's entire estimate is based on a premise that has been proved diametrically wrong time and again over the decades: that tax hikes increase tax receipts...
...big-business export enhancements...
...The American Spectator, P.O...
...But the few cuts and program terminations proposed—admirable in a small way—are a mere trifle...
...ended the successful Gramm-Rudman sequestration process...
...Business depreciation allowances should be made more generous...
...Terry Eastland's dissection of Rush Limbaugh's Revolution...
...Chamber of Commerce, and the National Association of Manufacturers came out against it—despite the administration's attempt to bribe big business by having the government pay off much of their existing pension load...
...The JEC study shows nearly a trillion-dollar funding gap accumulating by the year 2000, beginning with a $102 billion shortfall in 1995 and ending with a $219 billion gap in 2000—an average of $153 billion a year...
...Send for your copies today...
...See Fred Barnes's "Health Care Costs Are Going Down" in last month's TAS...
...Shaky Budget Numbers...
...Entitlements will make up 11.4 percent of GDP, up from a 10.2 percent rate in 1989...
...The Clinton budget's overarching vision is still one of ever-larger government funding...
...There are at least three new open-ended entitlement programs implicit in the plan: subsidized drug prescription payments, long-term home care payouts, and complete medical insurance for early retirees...
...Unless national economic policies return incentive to capital risk, economic growth—and especially job creation—will languish...
...Daniel Wattenberg's report on David Koresh...
...lengthened depreciation schedules...
...For all the Clintonites' self-congratulation about a 5.9 percent growth in fourth-quarter real GDP, on a fourth-quarter-to-fourth-quarter basis, the 1993 economy grew by only 2.9 percent, less than the 3.6 percent rate of 1992...
...If, on the other hand, a study compiled by the Republican staff of the Joint Economic Committee is correct, the news is even worse...
...administration's estimates...
...Overall, for the first eleven quarters of the current recovery, real growth has averaged a sub-par 2.7 percent, compared to a 4.4 percent average growth rate of the prior six recovery cycles...
...City: L 30 State: Zip Code: RP9403 Medicaid—with their price controls on drugs, doctors, and hospital fees—that has thrown health markets out of balance...
...BEAR STEARNS 28 The American Spectator March 1994 Along with Congress and many economists, this White House has completely forgotten the importance of economic growth to long-term fiscal solvency...
...Meanwhile, government's so-called helping hand—with attendant tax and regulatory and bureaucratic coasts—has become not a stimulant but a suppressant...
...Starting with an incredible proposal for a government takeover of the nation's health care system and moving through the rest of its domestic program increases, the administration is still trying to hide Rooseveltian economics behind twenty-first-century rhetoric...
...The last of these fell apart when the Business Roundtable, the U.S...
...defense spending as a percentage of GDP is scheduled to drop to a postwar low of 3.9 percent in 1994, a far cry from Reagan's mid-1980s level of 6.5 percent...
...The dropoff in defense spending has undoubtedly emboldened dictators in Serbia and North Korea, though the administration seems incapable of making the connection...
...Total U.S...
...economy, and an enormous "performance gap" between our historic 3 percent long-run growth and the dismal 1.8 percent actual growth rate over the past five years...
...Actually, domestic discretionary budget authority will rise by $10.1 billion in 1995...
...But none of the foregoing is reckoned to cost a cent in the FY95 budget totals, or even in the totals out to 1999...
...David Brock's investigation of Anita Hill and his new "Living With the Clintons...
...and Lisa Schiffren's exposé of the Clintons' Tax Returns are available to TAS readers...
...True, private costs have risen explosively, but only due to government price controls forcing cost-shifting up the ladder into the private sector...
...Twenty-first-century economics requires free markets and free choice...
...On the contrary, attempts to soak the taxpayer, such as Clinton's last budget, always backfire...
...The Incredible Shrinking AIDS Epidemic report...
...Let's not forget that, in 1989, Reagan's last fiscal year, the deficit, excluding deposit insurance, was down to $120 billion...
...That is, the higher 28 percent rate actually cost citizens about $230 billion in lost sales, and the government $65 billion in lost tax revenues...
...As a matter of national leadership and goal-setting, the U.S...
...Rolling back the low-tax policies of President Reagan, Congress has raised capital gains, income, payroll, luxury, gasoline, and estate taxes...
...If Reaganomics hadn't been rolled back and the economy had maintained its historic average of 3 percent real growth, the 1993 budget deficit of $255 billion would have been $140 billion lower...
...If CBO's numbers are right, the health-care plan will fall short by $133 billion over five years...
...Like nearly all the Clintonians, Reich believes that somehow jobs can be created without capital...
...must privatize its operations and cut its costs by selling all manner of land, loans, and assets...
...Unfortunately, slow growth continues...
...Address...
...and imposed huge new regulatory costs...
...The talk of capping the domestic discretionary budget is yet another deception...
Vol. 27 • March 1994 • No. 3
