[Congressional Record Volume 142, Number 128 (Tuesday, September 17, 1996)]
[Senate]
[Pages S10660-S10661]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                     DOLE ECONOMIC PLAN: VOODOO II

  Mr. EXON. Mr. President, last week, I delivered the first of a number 
of speeches on the fiscal follies of the Dole economic plan. I gave a 
brief history of voodoo economics in the Reagan-Bush years, its 
failure, and the economic carnage it left in its wake. I hope that I 
was able to shed a little light on an issue of great concern to all 
Americans.
  Today, I ask the American people to look at the Dole economic plan--
advanced voodoo economics, if you will. And if it wasn't for all of the 
harm it would cause, the Dole plan would be pretty amusing to this 
Senator who has worked on the budget for a long, long time.
  I must say that Bob Dole's supply-side plan reminds me of a 17th 
century scientist by the name of van Helmont who actually had a formula 
for making mice out of old underwear. At its heart, that's the Dole 
plan: taking bits and pieces of discarded economics and turning them 
into something unrealistic.
  Last week, I had the privilege to join with Democratic colleagues at 
an important forum on the Dole economic plan. Benjamin Friedman, 
professor of political economy at Harvard University, warned, ``The 
Dole-Kemp proposal is a reprise of a gamble that failed.''
  Former Budget Director Charles Schultze concluded,

       A reasonable and prudent person would have to question 
     severely the wisdom of repeating what the country did 15 
     years ago--enacting a large tax cut before budget balance is 
     well in hand.

  The Dole plan is mired in the same specious supply-side arguments and 
optimistic assumptions that made up the economic quicksand of 15 years 
ago. The original trickle-down economics delivered mediocre economic 
performance and a mountain of debt. Is there any reason to believe it 
will be different this time around? The answer is a resounding, ``No.''
  Like the original voodoo, the Dole voodoo II relies on bogus 
assumptions to hide its disastrous deficit consequences. It's a 
Whitman's Sampler of candy-coated scenarios. The Dole plan includes a 
$254 billion fiscal dividend for cutting the deficit; a $147 billion 
growth dividend for expanding tax breaks; and an $80 billion revenue 
dividend from projecting out a short-term blip in revenues. It hides 
the cost of back-loaded tax breaks and massive, unspecified spending 
cuts that no one believes will happen. As Mr. Dole ups the ante on his 
economic plan, he raises questions about its credibility.
  In spite of the truth nipping at his heels, candidate Dole assumes 
that he if he says nonsense enough times it will be believable. He's 
wrong. The latest New York Times: CBS poll shows that 64 percent of the 
electorate does not believe that Mr. Dole will be able to deliver the 
promised tax cuts.
  True to form, the Dole plan postulates that tax cuts largely pay for 
themselves through economic dividends. The Dole dividends are doubly 
implausible because most of the tax cut consists of items that have 
nothing to do with the economy's longrun capacity to grow. Most will do 
little or

[[Page S10661]]

nothing to stimulate savings, investment, or work effort.
  The Dole tax cuts' effects on the economy are likely to be worse than 
the lackluster performance posted during the Reagan-Bush years. The 
first supply-side gamble was taken at the trough of the 1981-82 Reagan 
recession, the deepest since World War II. Not surprisingly, the 1981 
across-the-board tax cut did boost the economy by stimulating spending, 
and not savings--boosting demand in the economy, not supply. As a 
consequence, much of the employment growth during the Reagan years 
resulted merely from people getting back jobs they lost during the 
recession.
  Unlike the early 1980's, when the unemployment rate reached 10.8 
percent, strong job growth over the last few years has brought our 
current jobless rate down to 5.1 percent. A shot of demand stimulus now 
would risk overheating the economy, push up inflation and interest 
rates, and do little to improve the already tight labor market.
  Any benefit from a trickle-down tax cut now would have to come from 
improvements in the economy's long-run capacity to grow. The prior 
experience with Reaganomics is not reassuring, since growth slowed to 
its previous longrun pace once the economy's slack had been taken up.
  The Dole plan also assumes that an unexpected jump in revenues this 
year will persist forever, even though CBO in its latest Economic and 
Budget Update argues that this blip may well be temporary.
  In fact, it could be worse. I am deeply concerned about the effects 
of the Dole tax cuts beyond the year 2002. There is no cutoff point; 
they keep growing and growing. The farther out the tax cuts are 
projected, the less coherence the Dole plan has, and the wider the 
deficit projections become.
  Like his supply-side predecessors, who stretched credibility like 
taffy, candidate Dole promises to balance the budget despite tax cuts 
totaling $550 billion. This would require spending cuts far more 
extreme than those that the Republicans failed to pass over the past 2 
years. And remember too, the number of programs that Dole has put off-
limits: Social Security, Medicare, defense, veterans, interest on the 
debt, the New Mexico labs, military retirees, and the list keeps 
growing every day. Even George Bush's Budget Director, Richard Darman, 
said that the Dole plan was not realistic politically.
  In most cases, the Dole plan leaves these huge spending reductions 
unspecified. In those instances where they are specific, however, the 
Dole campaign's own figures imply that some programs, like the Energy 
Department, should be cut by more than 100 percent. At least we can all 
agree that that will be a difficult task indeed.
  As I have said, the Dole plan will merely build the current mountain 
of debt to new heights. And history does not provide much comfort to 
those of us concerned about this horrible monument of fiscal 
irresponsibility. If past is prolog, we are in for more debt. Some have 
incorrectly claimed that President Reagan would have balanced the 
budget in 4 years as promised, save for the fact those Democrats were 
in control of the legislative branch. For three-fourths of the time 
that President Reagan was in office, he enjoyed the support of a 
Republican majority in the Senate. The record clearly shows that 
President Reagan failed to use the ultimate and readily available 
authority he had--the veto to cut spending. He clearly had more than 
sufficient votes to sustain a veto. Furthermore, neither Presidents 
Reagan nor Bush submitted a balanced budget certified by the 
Congressional Budget Office.
  So what's the bottom line on the Dole economic plan? In the September 
2, 1996, New Republic, Matthew Miller writes ``It's a fraud, covered up 
through deception and double counting.'' That's pretty harsh but I have 
to agree. Bob Dole shouldn't gamble away the future of our Nation with 
a farfetched, losing proposition that in the end will only end up with 
more spending.
  I simply say that the authority that the President has to cut 
spending should be used and the veto pen should always be their. It 
seems to me, Mr. President, that we should realize and recognize that 
we have had four straight reductions in the annual deficit of the 
United States.
  It seems to me that we should not go hellbent for election with an 
economic plan that this Senator believes is doomed to failure.
  Mr. President, I yield the floor.
  Mr. NICKLES addressed the Chair.
  The PRESIDING OFFICER (Mr. Smith). The Senator from Oklahoma.

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