[Congressional Record Volume 142, Number 120 (Thursday, September 5, 1996)]
[Extensions of Remarks]
[Pages E1534-E1535]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




   THE DOLE ECONOMIC PROGRAM--BEEN THERE! DONE THAT! IT DIDN'T WORK!

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                            HON. TOM LANTOS

                             of california

                    in the house of representatives

                      Thursday, September 5, 1996

  Mr. LANTOS. Mr. Speaker, a few days after the Congress adjourned for 
our August recess, the Republican presidential candidate, former 
Senator Robert Dole, unveiled his economic program. Although the fight 
over abortion at the Republican platform meetings in San Diego at the 
same time upstaged the unveiling and dominated the news coverage that 
week, Mr. Dole nevertheless continues to press forward with his 
economic program, which includes a 15-percent tax cut.
  Unfortunately, Mr. Speaker, we have been there. We have done that. In 
the words of the distinguished Senator from South Dakota, Mr.

[[Page E1535]]

Daschle, who I believe deserves the credit for the most remarkable and 
descriptive phrase for this program, this is ``deja voodoo economics 
all over again.'' We saw all of this when Ronald Reagan was elected 
President and his supply-side economic advisors brought us the tax cuts 
of 1981 and the budget deficits that plagued our Nation throughout the 
1980's. Now, after President Clinton and the Democratic Congress made 
some extremely difficult decisions in 1993, we have succeeded in 
cutting in half that Reagan/Bush-era legacy of huge annual budget 
deficits. It truly boggles the mind to contemplate the serious 
consequences that would follow the enactment of the Dole economic plan.
  Mr. Speaker, one of the best summaries and analyses of the Dole 
economic program appeared in an article by Matthew Miller which was 
published in the September 2 issue of the New Republic. I ask that this 
article be placed in the Record and I urge my colleagues to give it 
careful and thoughtful consideration.

                 [From the New Republic, Sept. 2, 1996]

                                Charades

                          (By Matthew Miller)

       Everybody in this room's gonna get tax relief!''--Bob Dole, 
     August 5, 1996.
       When respected politicians offer silly plans claiming to 
     fix big national problems, journalists are nonetheless 
     expected to give them the rational analysis only serious 
     plans deserve. The very effort legitimizes such proposals as 
     constructive additions to public debate. Especially when 
     these schemes are offered by a major party's presidential 
     candidate, there's no way around the conundrum, except to 
     note it. Which brings us to Bob Dole's new economic ``plan.''
       Everyone knows that Dole's call to cut taxes $550 billion 
     over six years while also balancing the budget betrays his 
     lifelong claims to be a fiscal conservative in favor of the 
     ``supply-side'' voodoo he's loathed. But you need to look at 
     the plan's ``details'' to really appreciate how it brings 
     budget chicanery to dizzying new heights. Indeed, if Dole's 
     team of job-seeking economists and GOP has-beens had set out 
     to discredit his career-long reputation for fiscal courage, 
     they couldn't have done it any better.
       Begin, as Dole does, with the candy. Dole's basic 
     assortment (using his campaign's six-year cost estimates) 
     includes a phased-in 15 percent cut in income tax rates ($400 
     billion); a $500 per-child tax credit ($75 billion); a repeal 
     of Clinton's 1993 increase in the portion of whether Social 
     Security recipients' benefits that are subject to taxes ($27 
     billion); a cut in the top capital gains tax from 28 to 14 
     percent ($13 billion); and a potpourri of such savings 
     incentives as IRA expansions and tax-favored education 
     accounts ($27 billion).
       To put Dole's new recklessness in perspective, these tax 
     cuts amount to more than twice what Republicans considered 
     ``revolutionary'' in the budget the president vetoed last 
     fall, and nearly five times what the GOP specified in its 
     updated budget blueprint this spring. As Martha Phillips of 
     the Concord Coalition notes, Dole's projected revenue loss 
     for 2002 alone is what this year's Congress hoped to enact 
     for the next six years together.
       Unfortunately, cost aside, the economics of the plan are no 
     better. Capital gains devotees say lower rates are needed to 
     spur savings and investment. Yet last time we ran that 
     experiment and lowered top rates from 35 percent to 20 
     percent between 1978 and 1985, savings and investment fell. 
     According to most economists, Dole-style IRA expansions give 
     people tax breaks for saving they're already doing, meaning 
     that or dismal overall savings rate would be unaffected. 
     Demagoguing Clinton's modest Social Security tax hike, which 
     affected only the best-off 13 percent of beneficiaries, 
     poisons the well for the kind of sensible means-testing that 
     Dole knows will son have to be considered. And even the 
     growth crowd admits Dole's child tax credit will boost only 
     current consumption--unless parents sock it away in Dole's 
     new education account, converting it, in effect, to a huge, 
     government-funded savings plan of the kind liberals would 
     blush to propose.
       Of course, the income tax cut is the plan's ``crown jewel'' 
     when it comes to supposed incentives for work and growth. 
     Assessing its likely impact means entering into the religious 
     war over the economic lessons of the 1980s. The mainstream 
     view is that, yes, Reagan's lower marginal rates spurred some 
     undetermined growth (though for most workers, subsequent 
     payroll tax hikes offset any income tax cuts). But the 
     ``boom'' supply-siders love to tout, the 3.8 percent annual 
     growth between 1982 and 1989, came mainly because we were 
     emerging from a deep recession that left jobless rates in 
     double digits and much idle capacity. When easier Fed policy 
     and the demand-side boost from Reagan's unprecedented 
     deficits picked up this ``slack,'' we grew faster for a time. 
     Measured properly, however--from peak to peak in the business 
     cycle--the 1970s actually saw faster growth (3.4 percent) 
     than the 1980s (2.7 percent).
       The supply-side elixir is an illusion, something Dole's 
     plan unintentionally admits itself. As Robert Reschauer of 
     the Brookings Institution points out, Dole's plan implicitly 
     assumes we'll get to about 2.5 percent growth from 2.2ish 
     today. That's a far cry from the 3.5 percent Dole and new 
     soulmate Jack Kemp peddle on the stump.
       When it comes to paying for this bonanza, Dole offers a 
     hoax wrapped in a farce tucked inside a charade. He 
     conveniently extrapolates a mysterious current revenue blip 
     to bank $80 billion more than the Congressional Budget Office 
     now expects will come in. He says a third of his supply-side 
     tax cuts will pay for themselves via higher growth, nearly 
     twice the ``magic'' Ronald Reagan himself relied on in the 
     '80s. Dole also books, in advance, the so-called ``fiscal 
     dividend'' that a credible balanced budget plan might bring 
     (through lower interest rates and higher growth, even though 
     his plan is anything but credible.
       Then, if possible, it gets worse. Dole assumes enactment of 
     $393 billion in spending cuts from the GOP budget that 
     Clinton vetoed last year. But tons of these cuts were 
     legislated by a mere spending ``cap,'' and thus never 
     specified at all. Even with this gimmick, dole still falls 
     $217 billion short of balance. That's trouble, since Dole has 
     irresponsibly sworn to keep the most expensive programs--
     defense and Social Security--off the table, along with any 
     Medicare and Medicaid savings beyond what Republicans have 
     offered already. That leaves basically one area to slice: so-
     called ``domestic discretionary'' spending, which makes up 
     just 15 percent of the budget, and which has already shrunk 
     from 5 percent of national income twenty years ago toward 3 
     percent today. This category includes everything we normally 
     think of as government, from national parks to NASA to the 
     FBI.
       Follow the bouncing ball here. Last year, with its painless 
     ``cap,'' the GOP pledged to cut such discretionary spending 
     25 percent in real terms by 2002. Now, Dole sees that cut and 
     raises it to 40 percent. If you assume Dole would spare R&D, 
     crime-fighting, veterans and education money, he'd have to 
     cut the rest--things such as airline safety, environmental 
     protection and low-income housing--an astonishing 60 percent. 
     This, when Republicans already say privately that last year's 
     proposed 25 percent cut is both politically impossible and 
     bad policy.
       The bottom line? Its a fraud, covered up through deception 
     and double counting. Dole says he'd seek deep cuts in the 
     Energy and Commerce Departments, but those cuts (if 
     achievable) would already have been used by the GOP to meet 
     the zillions in unspecified prior savings Dole wants to count 
     in his own plan. His additional ``10 percent cut in 
     nondefense administrative costs'' preposterously assumes that 
     $150 billion of today's $265 billion in domestic spending is 
     ``administrative'' (by Dole's reckoning, FBI and DEA agents 
     fit this category).
       How does the campaign defend this? As all pols know, the 
     trick on television is to have two ``talking points'' that 
     sound ``credible,'' because after two nonanswers, 
     interviewers move on. So we see Donald Rumsfeld earnestly 
     explaining that with a line-item veto, Dole can do it--though 
     the ``pork'' such a veto could excise amounts, under the most 
     porcine estimates, to 1 percent of federal spending. Jack 
     Kemp sidesteps questions about whether Social Security or 
     Medicare will be touched with the usual blather on growth. 
     Since network interviewers-thanks to ignorance, time limits, 
     fear of offending ``star'' guests or eventual frustration--
     usually tolerate such official dishonesty, the scam 
     invariably works. So the question of whether Dole's plan is 
     serious becomes, in the public mind, a legitimate matter for 
     debate, rather than being branded--as Newt Gingrich rightly 
     implores the media to dub Clinton's rhetoric about Medicare 
     ``cuts''--a con.
       Dole allies, putting the bet spin on their man's move, say 
     that he's still a budget-balancer and that his embrace of 
     whopping tax cuts is in the noble tradition of ``Nixon going 
     to China.'' They have it exactly wrong. Nixon's alchemy 
     turned a lifetime of dishonorable redbaiting into a historic 
     overture for peace. By contrast, Dole now squanders a 
     lifetime of honorable resistance to candy-cane politics in a 
     blatant pander that will only hamstring responsible 
     governance even if it works and he wins. If he needed to 
     energize Republicans, Dole could have proposed a reckless 
     plan like this, or named Jack Kemp as veep. Surely he didn't 
     have to do both.

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