BUSH HAS EMBRACED `VOODOO ECONOMICS'; HIS PLAN FAVORS THE RICH

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SATURDAY, February 15, 1992                   TAG: 9202170204
SECTION: EDITORIAL                    PAGE: A-11   EDITION: METRO 
SOURCE: CARROLL SMITH
DATELINE:                                 LENGTH: Medium
BUSH HAS EMBRACED `VOODOO ECONOMICS'; HIS PLAN FAVORS THE RICH
THE EDITORIAL Jan. 30 was right on the mark in respect to President Bush's State of the Union speech. A fizzle it certainly was, after the big bang we were led to expect.
The same kind of "let them eat cake" thinking was evident in his plan for health care, showing that he has no concept of what things are like for real people. The only thing insured in his plan is profits for insurance companies.
The persons who are to have a tax credit or tax deduction would be better served by continuing to pay the tax into a public fund for health insurance. It seems strange that it is a good thing to pay an insurance company $3,000 or $4,000 for a health plan, but a bad thing to pay half that amount in taxes for better coverage.
The other parts of his economic plan are also straight out of Never Never Land. One is to give tax deductions and penalty-free use of IRA money to first-time home buyers. This will help a few people who just happen to be properly situated.
But for a tax deduction to be useful, you need to have sufficient income to pay the taxes in the first place, and it is doubtful that very many persons in this group have IRAs to use. For the unemployed, none of the above is relevant at all.
How will President Bush take care of the unemployed? More of the same old supply-side, trickle-down nostrums that produced the situation in the first place.
Some 10 years ago, Ronald Reagan told us that the way to prosperity for all was to cut the taxes on corporations and the wealthy. This extra money was going to be used to start new enterprises and employ more people. The economy would take off like a rocket, and the federal budget would be balanced in three years.
What really happened was junk bonds, leveraged buyouts, liquidation of companies to pay debt, and a new bunch of household words: Milken, Boesky, Trump, BCCI and Silverado Savings and Loan.
In his book, "Surviving the Great Depression of 1990," Ravi Batra makes a convincing case for the proposition that income inequality is one of the principal causes of depressions.
This is because when lower-income people have money, they spend it for real commodities and provide for more employment for the persons who produce them. Rich people already have more money than they can spend on food, clothing, appliances or any other such things. If they have more money, they will use it to play financial games. Some will win, some will lose, but this is just shuffling money around among the same people and does nothing for the real productive economy.
This is exactly what we have seen during the days of Reaganomics and Bushonomics. The real, inflation-adjusted income of working Americans has been dropping by about 1 percent per year for some 15 years.
Today we routinely hear of multimillion-dollar salaries that are received (earned?) by corporate chief executive officers. In fact, the United States has the most polarized income distribution in the entire world.
The solution seems obvious. Increase taxes for corporations and wealthy individuals and use the money to provide jobs for rebuilding the infrastructure of the country, for education, for job training for displaced defense workers and many other neglected projects.
It is not a good bet that this will happen. George Bush has become a dedicated practitioner of the "voodoo economics" he denounced in 1980.
Since Uncle George in Washington will fume and sputter and veto anything sensible, we should remember that other George of 200 years ago who was insensitive to the needs of the American colonists. We need a new American revolution. Peaceful, this time.
The republic has not yet perished, but it suffers from paralysis and confusion. The mumbo-jumbo of the witch doctors in Washington is not likely to be helpful. It is time for the American people to reassert their rights and find a cure.

Carroll Smith lives in Shawsville and is a psychology professor at Radford University.

by Bhavesh Jinadra by CNB