Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, August 14, 1994 TAG: 9408170046
SECTION: EDITORIAL PAGE: D-3 EDITION: METRO
SOURCE: By ERNEST F. HOLLINGS
DATELINE: LENGTH: Long
Little more than a year ago, Congress passed a $500 billion deficit-reduction bill that Republicans unanimously opposed in both House and Senate. They hysterically predicted it would wreck the recovery and rain taxes on every American.
``It's a jobs-killing, economy-busting tax plan,'' growled Senate minority leader Bob Dole. The Republican Party line was remorseless: If the Clinton bill became law, people would soon be hunting Democrats with dogs and shooting them in the street.
Well, let's revisit the four horsemen of the Clinton apocalypse - the prophecies of doom conjured up by Republicans in Congress last summer - and see how they stand today:
The deficit will head north, not south.
Or, as Sen. Bob Packwood, R-Ore., put it in August of last year: ``I will make you this bet. I'm willing to bet the mortgage on it. ... One year from now, the deficit will be bigger than we are now predicting.''
The facts: When President Clinton took office, the Congressional Budget Office projected that if the new president did nothing, the deficits he inherited would hit $291 billion in 1994 and $284 billion in 1995. Today CBO projects that the deficits will be $200 billion in 1994 (a $91 billion reduction) and $180 billion in 1995 (a $104 billion reduction).
Clearly, many factors are involved in both the unexpectedly good economic and budget performances. However, as CBO Director Robert Reischauer testified earlier this year: ``The dramatic improvement since January [1993] is largely the result of the enactment in August of a major package of tax increases and spending cuts - the Omnibus Budget Reconciliation Act of 1993.''
The Clinton plan will wreck the recovery.
``Taking $250 billion out of the economy will turn a fragile recovery into a solid recession,'' predicted Sen. Kay Bailey Hutchison, R-Texas. The recovery was indeed fragile one year ago. But a key assumption of the Clinton plan was that by dramatically reducing the deficit, it would allow the Federal Reserve to reduce interest rates and spur economic growth.
It worked. One year later, the economy is growing at a solid, sustainable rate of 3.7 percent, inflation is down to 2.7 percent, 2.6 million new jobs have been created and unemployment has dropped to 6 percent (down from 7.7 percent when Clinton took office). Last month, Alan Greenspan - usually a gloomy Gus - testified that ``the outlook for the U.S. economy is as bright as it has been in decades.''
Birds gotta fly, fish gotta swim, Democrats gotta spend.
The Clinton plan raises $241 billion in new revenues over five years, which the Republicans claimed would be squandered, not saved. Sen. Phil Gramm, R-Texas, said last August, ``When all is said and done, people will pay more taxes, the economy will create fewer jobs, government will spend more money and the American people will be worse off.''
The facts are that every last dime of new revenue under the Clinton plan has gone strictly to deficit reduction. The appropriations bills now nearing completion in Congress will actually freeze overall discretionary spending for 1995 - the first time that has happened since 1969. By way of comparison, recall that annual discretionary spending exploded under Presidents Ronald Reagan and George Bush, rising steadily from $308 billion in 1981 to $536 billion in 1992.
The Clinton plan is the T-Rex of tax bills.
Dole said just before the Aug. 6, 1993, vote, ``In a few minutes, all those Americans watching on CNN and C-SPAN, put down your remote control and grab your wallet, because your taxes are going up.'' Polls last summer showed that Republican propagandists did a superb job of convincing Joe Sixpack that his income taxes were going up. Indeed, Joe still believes that his income taxes went up due to the Clinton plan.
The true story was finally told on April 15 of this year, when Americans filed their IRS returns: Only the wealthiest 1.2 percent of taxpayers - joint filers with adjusted gross incomes of $180,000 or above - saw an increase in income taxes because of the Clinton plan. Some 23 percent of Americans - including millions of ``working-poor'' families - will see a notable decrease in their taxes - thanks to a more generous earned-income tax credit. Between these extremes of rich and poor, the great mass of Americans saw no change whatsoever in their income-tax status.
Yes, the Clinton plan also included a 5-cent gas-tax increase that hit rich and poor alike. This, too, was the subject of much Republican teeth-gnashing. Sen. Bob Kerrey, D-Neb., responded with the common-sense observation: ``If people notice it, I'll be amazed. If people complain, I'll be ashamed.'' Sure enough, when the higher gas tax kicked in on Oct. 1, few noticed. Today, after-inflation prices at the pump are lower than they were last August.
One year later, the Clinton plan has proved its mettle. The results - in terms of deficit reduction, jobs and economic growth - speak for themselves. Indeed, the results pretty much have to speak for themselves. You won't read about them on the front page.
Ernest F. Hollings, a South Carolina Democrat, is a member of the Senate Budget Committee.
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