[Congressional Record Volume 142, Number 125 (Thursday, September 12, 1996)]
[Senate]
[Pages S10382-S10383]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         THE DOLE ECONOMIC PLAN

  Mr. EXON. Mr. President, as the Democrat leader on the Senate Budget 
Committee with a long and established record as a fiscal conservative, 
as Governor of my State longer than any other in its history, and proud 
of continuing that record for 18 years in the Senate, I begin today a 
number of statements on sound budgeting.
  These will be based on fact and proven or provable economic theory, 
or just common sense, in a hope that I might divert America from 
careening again down a path that will certainly lead our Nation to new 
irresponsible depths--new depths indeed--of national debt, if not 
depression.
  Alarmingly, the latest ``Follow The Yellow Brick Road'' path of 
wizardry blends $550 billion in tax breaks, unspecified spending cuts, 
and rosy economic scenarios into one shameless political ploy. When the 
unsuspecting Dorothys of the world pull back in wonderment the curtain, 
they discover a huffing and puffing candidate Bob Dole as the wizard. 
This is the same wizard who for the first 72 years of his life 
foreswore such economic nonsense.
  Bob Dole's transformation from a deficit hawk into a carrier pigeon 
for supply-side economics is a great loss and disappointment to fiscal 
conservatives of both parties.
  In my 18 years in the Senate, I often stood shoulder to shoulder with 
then Senator Dole. Although we have had different priorities when it 
came to spending cuts, we were both strong advocates of a line-item 
veto, a constitutional amendment to balance the budget, and a no-
nonsense approach to economic policy.

[[Page S10383]]

  But as Senator Bob Dole became Presidential candidate Bob Dole, 
fiscal responsibility was turned on its ear. Irresponsible tax cuts 
became his fetish. Listening to the advice of the campaign consultants 
and pollsters instead of using common sense, Bob Dole, I am afraid, has 
lost his moorings. And to pay for his folly, he would have us fall into 
a deeper pit of deficits and debt.
  Mr. President, we cannot allow that to happen to the American people 
a second time. We cannot allow the 1980's gibberish of supply-side 
economics to go unchallenged again. As a freshman Senator, I supported 
it, as did Senator Dole. In retrospect, I acknowledge it was the worst 
vote that I ever cast, in the Senate.
  To understand the terrible gamble Bob Dole is taking with our future, 
the American people should understand the history behind it. I would 
like to spend a few moments today describing the fiscal carnage of the 
1980's, or as George Bush once christened it, ``Voodoo Economics.'' And 
there is no magic to it. It is just misery.
  During the 1980's, the American people got their first taste of the 
supply-side mumbo-jumbo. It was the Reagan-Bush feel-good, no-fuss, no-
muss way to reduce the deficit and grow the economy. There was only one 
catch: It simply did not work.
  Enacting huge tax cuts and increasing spending without balancing the 
budget, was a ghastly experiment gone terribly awry. Fed by a quick 
shot of high-octane tax cuts, the economy revved up and then sputtered. 
The promised revenues evaporated and the deficit exploded with a big 
deficit bang. A small hill of debt became a mountain.
  The supply-side economics of the 1980's was a classic example of the 
difference between promise and performance. Supply-side tax cuts were 
supposed to boost the private sector's economic performance. In fact, 
the economy put in a mediocre showing only, during the Reagan years.

  For example, private-sector job growth was 3.3 percent per year in 
the Carter years, compared with 2.3 percent under Reagan and 0.4 
percent in the Bush years. It finally rebounded to 2.9 percent during 
the Clinton administration--but without, and I repeat, without supply-
side economics.
  Private investment, which also was supposed to receive a boost from 
supply-side tax cuts, slumped during the Reagan years. Real business 
fixed investment, which had been growing at a 7.1-percent annual clip 
during the Carter years, slowed to a 2.6-percent pace under Reagan, and 
came to a screeching halt under Bush. During the Clinton 
administration, business investment has soared at a 8.4 percent rate, 
the strongest showing since World War II.
  With both private-sector employment and business investment suffering 
under supply-side policies, it is not surprising that private-sector 
gross domestic product also posted an inferior performance, by any 
measure. The growth of the private-sector slowed from a 3.5-percent 
pace under Carter to a 3.0-percent rate during the Reagan years. Having 
registered a meager 1.3-percent showing under Bush, private-sector 
growth now currently has averaged 3.2 percent during the Clinton 
administration.
  We are often told that the Reagan tax cut led to a doubling of tax 
revenue by the end of the 1980's. That is merely a manipulation of the 
facts. Total revenue doubled during the 1980's but income tax revenue 
fell far short of doing so. Revenue from Social Security taxes, 
however, more than doubled as a direct result of a major Social 
Security tax increase in 1983. That tax increase, incidentally, was 
passed when Republicans held a majority of the U.S. Senate and Senator 
Bob Dole was chairman of the Senate Finance Committee.

  Having failed to deliver on its economic promises, it should not be 
surprising then that supply-side tax cuts also failed to deliver the 
declining deficits promised by the Republicans.
  In March 1981, the Reagan White House predicted that the deficit 
would shrink from its $79 billion level and the budget would be 
balanced by 1985. Instead, the deficit widened dramatically, hitting 
$212 billion in 1985--when it was supposed to be zero--and topping out 
at $290 billion in 1992.
  A year later, the Reagan administration could see the red ink rising. 
President Reagan told the Nation in 1982, and I quote,

       One area of justifiable concern is the deficit. And believe 
     me, we take it as seriously as any problem facing us. But 
     let's recognize why such a huge deficit is projected. It is 
     not, as some would have you believe, a product of our tax 
     cuts.

  I am here to tell you and the American people that it was because of 
the tax cut. But do not just take it from me. More than 10 years after 
President Reagan made that famous speech, his OMB Director, David 
Stockman, said his boss was wrong. The deficit was caused by the huge 
tax cuts that were the hallmark of President Reagan's first year in 
office.
  In an article on the deficit in the March 1993 issue of New 
Perspectives Quarterly, Mr. Stockman wrote, and I quote,

       The root problem goes back to the July 1981 frenzy 
of excessive and imprudent tax cuts that shattered the Nation's fiscal 
responsibility . . . It ought to be obvious by now that we can't grow 
our way out [of the deficit].

  Mr. President, the huge deficits of the Reagan years have left 
taxpayers with a gargantuan burden of debt and debt service. When 
President Reagan took his oath of office, the debt was under $1 
trillion. When he left, our national debt was over $2.6 trillion, a 
debt expanded over fourfold since President Carter to over $4 trillion 
by the time President Bush left office. If it were not for the interest 
payments on the debt built up during the last two Republican 
administrations, the Federal budget would now be in surplus.
  The Nation has paid a terrible price for the mistakes of the 1980s, 
and we are still paying for them. Supply-side economics left an 
economic radioactive fallout that pollutes the economy for years to 
come. We still do not know its halflife. I feel as though I have spent 
most of my Senate career trying to clean up the mess, and many of my 
colleagues have joined in that work, but the job is still unfinished.
  We in the Senate spend a lot of time talking about the legacy we will 
leave our children and grandchildren. But if we are indeed concerned 
about mortgaging our children's future, we cannot and we must not 
resurrect supply-side economics. We clearly made a horrendous mistake 
economically in the 1980s. To duplicate it in the 1990s would be 
unforgivable. Neither Dorothy nor any self-respecting munchkin would or 
should forgive us.
  The PRESIDING OFFICER (Mr. Bennett). The time of the Senator has 
expired.
  Mr. EXON. I thank the Chair and yield the floor.

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