by John M. Curtis
(310) 204-8700

Copyright August 11, 1999
All Rights Reserved.

overnment is too big and it spends too much," said an inspired Ronald Reagan during campaign 1980, launching his anti-big government crusade winning him the White House and, his party, the Congress. "Our job is to reverse the size and influence of the Federal establishment . . ." became the rallying cry for a new breed of conservatives — embodied by Newt Gingrich — which swept across the nation and into Congress during the Republican revolution of 1994. Little did anyone know in 1992 that the occupant of the White House — George H.W. Bush — mouthed his now infamous words "Read my lips" [no new taxes], betrayed his base and proceeded to raise taxes. With the economy stuck in neutral, the electorate crossed over and elected Democrat William Jefferson Clinton.

       When Ronald Reagan took the baton from president Carter in 1981, the overheated economy was already beginning to cool off. With more than a 60 billion dollar budget deficit ballooning out of control, interest rates well into double-digits and unemployment rising, Carter’s plan was to increase taxes to compensate for anticipated government shortfalls. While president Reagan did his best to fulfill his campaign promise of a 10% across-the-board tax cut, it did very little to reverse the whopping tax increases passed under the Carter administration. Reagan’s promise to balance the budget by 1983 through a stimulus package which included dramatic cuts in Federal spending and tax rates, proved George H.W. Bush 'psychic' with his slogan 'Voodoo economics.'

       With unemployment at records highs, budget deficits escalated during the vaunted Reagan years. Maintaining excessively high tax rates, designed to counteract recessionary levels of unemployment, enabled the Clinton administration to obliterate, during his first term, a 250 billion dollar budget deficit. As the economy continued to roll, unemployment at record lows, the Federal Reserve lowering interest rates, and Wall Street’s juggernaut in full swing, the bull market guaranteed unprecedented economic growth. Just as the Reagan and Bush administrations piled up massive deficits, the Clinton White House raked in more cash than a riverboat gambler. With disproportionately high tax rates and nearly full employment, surpluses piled up like flapjacks. Some surprise.

       Now we’re back up-to-date. "The Federal government doesn’t make money, it just takes it from the people," noted an insightful president Reagan. In the same breath he said, "Government doesn’t need the money it gets, it gets the money it needs . . .," underscoring the fact that the Federal government has no intention of giving back what it’s already taken away. It’s with this rationale that both houses of Congress just passed a 792 billion dollar tax cut bill. Democrats have already dismissed the legislation as a partisan political ploy. "It’s not a bill," said Rep. Charles B. Rangel (D-N.Y.), "it’s a piece of campaign literature." He may be right. But that doesn’t negate the indisputable fact that taxes are obscenely high.

       Showing complete disregard for the average wage earner’s tax burden, president Clinton is pretending that the Federal government knows better how to spend American workers’ hard-earned money. Suggesting that he intends to use these windfalls to reduce the national debt and fix social security rings a hollow chord. Tax payers had nothing to do with excess government spending leading to the national debt nor did they have anything to do with problems with social security. Why should they be punished now? While most people want a fiscally solvent social security system, they also want government accountable for their own extravagance.

       When Congress voted themselves substantial pay raises earlier this summer, they also felt it fair to give American wage earners a pay increase. As long as the economy steams along, there’s plenty of money to spread around. What’s wrong with paying down the national debt, fixing social security and cutting taxes? It only forces government to continue streamlining, eliminate costly inefficiencies and live within its means. Adding prescription drug benefits to Medicare sounds irresistible, but financing it out of the general fund is risky business. Obviously, financing it by increasing the Medicare tax is equally unacceptable. What happens when the next recession eventually hits? Maybe Alan Greenspan knows something we don’t, but all economies run in cycles, despite the best interventions and intentions.

       Lowering income tax rates, reducing the 'bracket creep' with the marriage penalty, cutting capital gains taxes, wiping out inheritance taxes, and expanding limits on IRAs, are all long overdue. Congress’s 1999 sweeping tax cut bill doesn’t threaten the operation of government, it forces government to recalculate appropriate levels of taxation given the present economic conditions. If the economy heads South, the roll-out of the bill’s provisions also change to accommodate government shortfalls. But the intent of the bill acknowledges that, in the current economic cycle, tax rates are obscenely high, and the government has no presumptive right to such a high percentage of wage earners’ salary.

       "The present legislation threatens to blow a hole in the surplus," said president Clinton, promising a certain veto of the bill. What could be more disingenuous? Yes, of course, these tax cuts will reduce the surplus, that’s the whole idea. The government shouldn’t be running massive surpluses, they should be balancing its budget without running deficits. Let America’s hard working wage earners keep more of their own money and spend it on what they want, rather than let the government get their hands on it. Pretending that Washington knows best how to spend tax payers’ earnings is wishful thinking — a lot more wishing than thinking.

About the Author

John M. Curtis is director of a West Los Angeles think tank specializing in human behavior, health care and political research and media consultation. He’s a seminar trainer, columnist and author of Dodging The Bullet and Operation Charisma.

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