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Banned
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Originally Posted by 1010011010
The solution is to vote for a mix of candidates from multiple party affiliations so they're all too busy squabbling amongst themselves to chuck the tax dollars down some black hole project or another.
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Indeed....the exact opposite of your "solution", is what ended up happening in 1993:
<b>In 1981 and in 2001, new majorities took over in the executive branch and in the House, and began programs of radical tax reduction that heavily favored reduction in taxes for the richest ten per cent. Both periods of tax "reform" were followed by massive federal budget deficits of long duration. In 1993, democrats took the presidency and enjoyed a majority in both houses of congress. Without this one party control, there was no chance to pass the drastic tax increases that reversed the 12 years of favorable tax treatment of the rich. The results speak for themselves. Radical reduction of the progressive taxation formula, in 1981, led to immediate reduction in federal revenue that triggered huge tax increases, just one year later. The 2001 abandonment of the Clinton era restoration of progressive taxation caused the treasury debt to increase from a 2001, surplus of nearly $50 billion, to new debt accumualtion of $2699 billion, as of Sept. 30, 2006.</b>
This is what Clinton inherited:
Quote:
Bush to Paint Darker Picture Of U.S. Deficit --- Gap in 1997 May Exceed $300 Billion; Clinton Advisers Are Gloomier
By David Wessel. Wall Street Journal. (Eastern edition). New York, N.Y.: Jan 5, 1993. pg. PAGEA.2
Dow Jones & Company Inc <b>Jan 5, 1993</b>
WASHINGTON -- <b>President Bush will report tomorrow that the outlook for the federal budget deficit is growing worse, and that it will probably exceed $300 billion in fiscal 1997</b> unless there are substantial changes in federal policy.
President-elect Clinton's advisers say Mr. Bush and his budget director, Richard Darman, are understating the problem.
Estimates circulating inside the Clinton transition team, based on information from the White House budget office, say the deficit in fiscal 1997 (which begins Oct. 1, 1996) would hit $384 billion -- if the government were to maintain the current level of services and defense spending.
The Clinton camp has an interest in making the deficit look as bad as possible so it can blame the pain of reducing it on 12 years of Republican presidencies. And some Clinton advisers are urging the president-elect to use the worsening deficit outlook to explain why he must retreat from some of his costly campaign promises -- or propose tax increases or spending cuts beyond those he described before the election.
The abbreviated Bush budget due tomorrow won't give Mr. Clinton much advice on how to reduce the deficit. It will include alternative deficit projections based on different economic forecasts and different caps on federal spending. But the $384 billion forecast for 1997 that is circulating in the Clinton camp won't be among those scenarios.
The Bush administration's economic forecast, to be released along with the budget, predicts the economy will grow by 2.9% between the fourth quarters of calendar 1992 and 1993 and that the unemployment rate will gradually decline to average 6.9% this year, administration officials said. The administration expects interest rates on three-month Treasury bills to average 3.5% and on 10-year Treasury securities to average 6.5% during calendar 1993.
The budget will show deficit projections based on this economic forecast, among others.
Even the most pessimistic of Mr. Darman's scenarios assume -- as both the White House and the Congressional Budget Office have in the past -- that the government sticks to the spending ceilings for fiscal 1994 and 1995 that were written into law back in 1990.
For fiscal years 1996 through 1999, Mr. Darman assumes that total discretionary spending (which includes domestic and defense spending that is appropriated annually) is frozen without any increase for inflation. In other words, any increase in domestic spending, even an increase to keep up with inflation, would be matched by a cut in defense.
But some Clinton aides complain that this approach understates the deficit problem that Mr. Clinton faces. Without ever saying so explicitly, <b>Clinton aides say, the projections assume that the current level of services won't be maintained.</b> This dispute doesn't involve spending on health and other government benefit programs, which are a far more vexing budget issue.
Although the deficit outlook grew progressively worse during the campaign -- partly because spending on health care has been rising faster than anticipated and revenues fell short of expectations -- Mr. Clinton never revised his economic plan. Since the election, however, the president-elect himself has called attention to the fact that the deficit now looks far worse than it did when his plan was assembled.
Mr. Clinton's communications director, George Stephanopoulos, said yesterday that recent deficit projections "make our attempts to address the deficit more urgent and more necessary at the same time, and that's what we intend to do."
The deficit for fiscal 1992, which ended Sept. 30, was $290 billion. This year's deficit will be larger, partly because Congress postponed some spending on the savings-and-loan cleanup.
Credit: Staff Reporter of The Wall Street Journal
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<b>This is what Clinton and the democratic congressional majority did to reverse what they inherited:</b>
Quote:
http://www-tech.mit.edu/V113/N19/budget.19w.html
Clinton Sends Congress Detailed $1.5 Trillion Budget
By Ann Devroy
and Steven Mufson
The Washington Post
WASHINGTON
.....The next step is for congressional appropriations committees to come up with their own versions of spending plans and for key committees to draw up tax plans. <b>With Democrats controlling the White House and Congress, the Clinton budget is expected to carry far more weight in that process than in the years of divided government</b>........
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Quote:
And Progressing in the House; [FINAL Edition]
The Washington Post . Washington, D.C.: May 16, 1993. pg. C.06
EDITORIAL
IN THE hospitably Democratic House last week, the president's program made steady progress. The legislative committees cleared and sent to the floor for a likely vote by the end of the month not just the main ingredients of his deficit reduction plan; the so-called reconciliation bill would advance much of his broader agenda as well.....
.....The tax provisions are the bill's main engines. <b>The increases make it possible to get at the deficit in a way that spending cuts alone will never do; 12 years of borrow-and-spend and the piling-up of national debt attest to that.</b> The proposals would also reverse distributional policy, <b>restoring some of the progressive edge that the tax code lost in the 1980s and early 1990s; the Democrats would resharpen the ax.</b> The administration says that about two-thirds of the burden in the bill would fall on upper-income families; <b>theirs was the burden most reduced in the Reagan-Bush years.</b> The legislation would also continue to increase the earned-income tax credit that serves as a wage supplement for the working poor with children. That is the predicate to welfare reform; the supplements are meant to help produce a society in which no child of a full-time year-round worker need be poor. The broad-based energy tax in the bill, in addition to raising revenues, would help discourage energy consumption. And the Ways and Means Committee Democrats who did the week's heavy lifting accepted the president's proposal to subject a larger share of Social Security benefits to the income tax. Social Security is a fifth of the budget. As a matter of fairness, its recipients ought to contribute to deficit reduction, and this is the fairest way to exact the contribution, since the poor won't pay; they don't owe income taxes.
The House is thought to be prepared to pass the bill, as well it should. The Senate is expected to be the harder case. But the reconciliation bill is no more than a carrying-out of the terms of the budget outline or resolution that Congress already adopted as a first step at the president's behest last month. The Senate is obliged to meet those terms no less than is the House; <b>if not these tax increases, which? Nor can the Republicans filibuster a reconciliation bill, which under the rules is exempt.</b>
Mr. Clinton won't win it all, and perhaps attention will continue to be focused on the ground he is forced to give instead of the ground he gains. It's a strange phenomenon. <b>He is tackling fiscal and social problems from which the political establishment largely fled for 12 years - and in the process it is he who is being accused of fiscal irresponsibility and lack of resolve.</b> He was asked the other day why he thought he had fallen in a recent poll. "For one thing, I'm trying to do hard things," he said. So he is - <b>he is trying to bring down a runaway budget deficit in a weak economy without suspending social policy - and on the basics, so far he continues mostly to win.</b> The House committees did well.
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Quote:
The Tax and Budget Debate: Deficit-Cutting Bill Bears a Resemblance To 1990 Predecessor --- But Differences May Be Crucial; Realistic Economic View, Increase in Taxes Are Cited
By David Wessel. Wall Street Journal. (Eastern edition). New York, N.Y.: Aug 3, 1993. pg. PAGEA.3
Aug 3, 1993
WASHINGTON -- Is it really 1990 all over again?
The deficit-reduction bill emerging from the House-Senate conference committee bears a surprising resemblance to the 1990 deficit-reduction bill that Congress finally passed -- and George Bush, to his later regret, signed.
Both raise income tax rates on the wealthiest Americans and make them lay out more in Medicare payroll taxes. Both rely heavily on money-saving changes to the Medicare program. Both reward the working poor by sweetening the earned-income tax credit. Both set strict ceilings on congressional appropriations, but not on spending for federal benefits. Both claim to reduce the deficit over the next five years by nearly $500 billion.
And then there is the gasoline tax. After rejecting a bigger energy tax than Mr. Bush and congressional leaders negotiated, Congress ended up raising gasoline taxes by only a nickel a gallon in 1990. This time, President Clinton's big broad-based energy tax gave way to an increase of 4.3 cents a gallon.
"There are at least some superficial similarities," says Allen Schick, a University of Maryland political scientist and a student of the federal budget. "A bunch of Clinton's spending initiatives have gone by the wayside, and that was the main difference with the '90 deal."
But the differences between the 1993 plan and its 1990 ancestor may be much more significant, both economically and politically.
First, this year's all-Democratic deficit-reduction program relies far more on tax increases, particularly on upper-income Americans, than the bipartisan 1990 version.
Second, Mr. Clinton seems to have been more successful than Mr. Bush was in convincing Congress to couple deficit reduction with tax breaks to encourage investment, including a capital-gains tax cut for investors in certain small firms and the creation of tax-favored "empowerment zones" to lure jobs to pockets of poverty.
And, because the 1993 plan is built on more realistic economic assumptions and occurs at a moment when the economy appears to be strengthening, there is some reason to believe that it is more likely to achieve its stated deficit goals than the 1990 plan, which ran smack into recession.
But then the goals are more modest: While the 1990 plan promised to get the deficit down to $29 billion by the fifth year, the 1993 plan aims at getting it to about $210 billion by the fifth year. (This year's deficit is estimated to be $285 billion.)
"I think you can factually prove that this is more credible," says Clinton aide Gene Sperling. Clinton deficit projections rest on an economic forecast closer to the consensus of private forecasts than the outdated one that was used when the 1990 plan came to a vote. This time, there isn't any recession on the horsome Clinton's advisers expect the economy to do better over the next five years than the budget forecast.
Republican critics say the Achilles's heel of the Clinton-backed plan is its tax increases on the rich. If the rich have more success in ferreting out tax shelters than the Treasury expects, then tax receipts may fall short of projections. "The inducement to shelter -- and the likelihood of not getting all the revenue they think they're going to get -- is greater because they have much higher marginal tax rate increases," says Michael Boskin, who was Mr. Bush's economic adviser.
And tax receipts are crucial. By Congressional Budget Office calculations, the 1990 plan raised taxes by about $158 billion over five years. A comparable tally of the 1993 plan shows roughly $245 billion in tax increases. While the upper-bracket taxpayers were to come up with about $40 billion in higher income taxes under the 1990 plan, which took the top marginal income tax rate to 31%, they are supposed to come up with $116 billion under the new plan, which takes the top rate to 39.6%.
The latest Internal Revenue Service data show that the 1990 income tax rate increases did, as intended, produce higher revenues from the richest 850,000 taxpayers. Those taxpayers with incomes above $210,000 or so reported less income overall and paid less in taxes in 1991 than in 1990, a fact that has fueled the argument that higher tax rates are counterproductive. But recently updated IRS data show that all of the decline in their tax payments reflects a steep drop in capital-gains income -- and the capital-gains tax rate didn't change in 1990. Taxes paid on ordinary income, the income subject to higher tax rates, actually rose by almost $2 billion even though the total amount of income other than capital gains dropped by $15 billion.
The recession wasn't the only reason the 1990 plan fell short of the mark. A change in Treasury estimates of overall tax receipts in 1991 added about $114 billion to the five-year deficit tally, the sort of unanticipated technicality that could recur.
More importantly, federal health-care spending grew far greater than anyone was predicting back in 1990. "The 1990 plan didn't work because it didn't contain entitlement programs. This one doesn't either," complains Sen. Pete Domenici of New Mexico, senior Republican on the Budget Committee. But this year's deficit plan does rely on more pessimistic projections of health-care costs -- so pessimistic that economist Gail Foster of the Conference Board speculates that the administration has built in the possibility of a "positive surprise."
Architects of this year's attack on the deficit deliberately borrowed one feature from the 1990 plan that seems to have worked: the ceilings on the total sum Congress can appropriate for what's known as discretionary spending -- everything from paying salaries to buying bullets. Over the past three years Congress has kept relatively close to the caps, appropriating only 2.5% more than the caps allowed over that period.
But last time, the White House and Congress agreed to boost domestic spending authority by a hefty 12% before imposing the caps. Unfortunately for Mr. Clinton's ambitious investment spending agenda, the new caps, which extend through 1998, don't provide for such a surge in spending. If congressional appropriation committees agree to every spending cut that Mr. Clinton has proposed, Mr. Sperling says, "about 60% of the proposed investments can still be funded under the caps."
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....and the this Heritage Foundation, John Olin Fellow, back in 1996, certainly wasn't hesitant to lay all of the "blame" on Clinton and the democrats, for voting in the 1993 tax increase:
Quote:
http://www.heritage.org/Research/Budget/FYI92.cfm
No. 92 March 29, 1996 WHY CLINTON SHOULD NOT GET. CREDIT FOR REDUCING THE DEFICIT
By Joe Cobb John M. Olin Senior Fellow in Economics
......CBO's September 1993 estimate of new tax revenues from Clinton's economic program might have been too large, <b>but such an error would hardly be to the credit of the political leadership that pushed through the largest tax increase in history on a strictly party-line vote.</b> The Heritage Foundation will soon release a report analyzing the impact of the Clinton Admini- stration's tax and spending policies from the Omnibus Budget Reconciliation Act of 1993 (OBRA- 93) on the nation's economic performance. Using one of the nation's leading models of the U.S. economy, this study will examine how the economy would be performing today had the Clinton Ad- ministration and Congress not raised taxes as the U.S. was coming out of the 1990-1991 recession. This analysis will show that President Clinton's 1993 economic plan actually has deprived Ameri- cans of a higher standard of living by cutting the economy's growth potential.
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<b>.....and the 1993 tax increase certainly wasn't "the largest tax increase in history".... that distinction belongs to Reagan's 1982 tax increases, after the consequences of his 1981 tax cuts cause him to "flip-flop", according to this factcheck.org excerpt:</b>
Quote:
http://www.factcheck.org/article173.html
Study published by Bush's Treasury Department contradicts Bush's campaign.
April 16, 2004
Modified: April 16, 2004
........The study said that inflation-adjusted "constant dollars" is probably only the second -best measure of the size of a tax increase. "The single best measure for most purposes is probably the revenue effect as a percentage of GDP." That's Gross Domestic Product, the way we gauge the size of the economy. Clinton's tax increase isn't the biggest by that "best" measure, either. In the period since 1968, the study said, "the Tax Equity and Fiscal Responsibility Act of 1982 was the biggest increase." That was the tax increase signed by Ronald Reagan, rescinding some of the effects of his huge tax cut passed the year before.
That 1982 tax increase only slightly exceeded Clinton's in inflation-adjusted dollars ($37 billion a year vs.. $32 billion) but it was much bigger in relation to the size of the economy. The '82 increase amounted to 4.6% of GDP (average for the first two years) while Clinton's was 2.7%....
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Last edited by host; 10-29-2006 at 12:35 PM..
Reason: Automerged Doublepost
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