[Congressional Record Volume 143, Number 84 (Tuesday, June 17, 1997)]
[House]
[Pages H3830-H3831]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                TIME TO CUT TAXES FOR WORKING AMERICANS

  (Mr. SMITH of Michigan asked and was given permission to address the 
House for 1 minute and to revise and extend his remarks and include 
extraneous material.)
  Mr. SMITH of Michigan. Mr. Speaker, I would like to include a 
newspaper article in the extension of my remarks

[[Page H3831]]

that is from the June 13 Wall Street Journal. It is called Raise Taxes, 
Wait Four Years, And Boom, by Paul Gigot.
  The fist paragraph says, ``When it comes to writing history, you 
can't beat the Democrats. Witness the smooth way they're taking credit 
for this year's roaring economy and even using it to rehabilitate their 
1993 tax increase.''
  Then the rest of the article goes on to say that the problem is that 
tax increases depress the economy. One cannot spin it any other way.
  Look, we have a strong system in this country that rewards the people 
that work, that try, that save, that invest; and despite that tax 
increase, our economy surged ahead.
  Mr. Speaker, there are some things that this country needs to do if 
we are to be competitive in a world market, and one of those things is 
to cut taxes. The way we do it, if it results in more investment, more 
savings, more buying of the kind of machinery and tools that makes us 
more efficient and more competitive, the better off everybody is going 
to be.
  So I think it is important that we move ahead with these tax cuts.
  Mr. Speaker, I include for the Record the article to which I 
referred.

             [From the Wall Street Journal, June 13, 1997]

              Raise Taxes Wait Four Years, And . . . Boom

                           (By Paul A. Gigot)

       When it comes to writing history, you can't beat the 
     Democrats.
       Witness the smooth way they're taking credit for this 
     year's roaring economy and even using it to rehabilitate 
     their 1993 tax increase.
       ``This is the best economy we've had in 25 years in this 
     country, and again I think a lot of it goes back to the 
     budget passed by all Democrats in 1993,'' House Democratic 
     leader Dick Gephardt says--every chance he gets.
       President Clinton, no slouch at spin, says every other day 
     or so that ``Some fine members of Congress lost their seats 
     because they had the courage to change course and vote for 
     the future. But just look at the results. Today our 
     confidence has returned, and our economy leads the world.'' 
     By ``fine members'' he doesn't mean Republicans.
       This is clever, as revisionist history usually is. If only 
     it were true. Since prosperity is today's dominant political 
     fact, it'd be nice to draw the proper lessons. An accurate 
     reading of recent economic history would give Mr. Clinton 
     some credit, while handing at least as much to a Republican 
     Federal Reserve and Congress.
       Recall the logic Democrats used to justify their tax 
     increase in 1993: It was needed to lower the budget deficit 
     in order to lower interest rates in order to spur the 
     economy. Treasury Secretary Bob Rubin's Bible was the bond 
     market, which sets interest rates for everything from credit 
     cards to mortgages.
       And for a while after Mr. Clinton's 1992 election, bond 
     yields and interest rates did fall. The 30-year Treasury 
     bond, probably the best political barometer, fell from 7.61 
     percent to 5.94 percent by October 1993. Mr. Rubin crowed in 
     vindication.
       But then came the market's revenge, starting about the time 
     the White House proposed to nationalize 14 percent of the 
     U.S. economy: Interest rates shot back up, to a peak above 8 
     percent on the very day Republicans won control of Congress. 
     Mr. Rubin wasn't crowing any more.
       Guess what happened next? Interest rates began falling 
     again after the 1994 election, to an average monthly low of 
     6.06 percent by the December 1995 budget standoff. They've 
     since bounced around between 6 percent and slightly above 7 
     percent.
       In short, interest rates fell further and faster with a 
     Republican Congress that was trying to cut taxes than they 
     did with a Democratic Congress that raised taxes. By Bond 
     Market Bob Rubin's own standard, the 1993 budget deal counted 
     for less than did GOP plans to constrain the government.
       The four year history of stock prices is also revealing. 
     When Mr. Clinton won election, the Dow Jones Industrial 
     Average stood at 3223, an early stage in the economic 
     recovery. The Dow rose modestly, to 3830, in the president's 
     first two years.
       But when Republicans took Congress, stocks began to take 
     off. By February 1996 the Dow was at 5600, where it bounced 
     around until voters affirmed divided government last 
     November. Then it soared again, closing this week above 7500 
     for the first time.
       Financial markets aren't the entire economy, but they often 
     anticipate growth. And sure enough, the pace of this 
     expansion has followed the market pattern. Growth was a 
     mediocre 2.3 percent in 1993, dampened by the disincentives 
     of the tax hike. The economy gained speed as the shadow of 
     ClintonCare faded and has really taken off since the 
     beginning of this year.
       The point here isn't to deny Mr. Clinton his rightful 
     credit. He gets full marks for leaving Republican Alan 
     Greenspan alone to run the Fed, and for reappointing him. 
     Just as vital, he resisted his own party's lurch toward 
     protectionism. Even if NAFTA and GATT were started under 
     Republicans, maybe only a Democrat could have seen them 
     through a Democratic Congress.
       But for Democrats and their acolytes to portray the last 
     four years as a single, unbroken policy string is laughable. 
     Free trade and the Greenspan Fed have been the only 
     constants. The rest of Clintonomics went over the side when 
     the Republicans took Congress.
       Clinton I had tax hikes, new ``stimulus'' spending, 
     Hillary's fantasia and a wave of new regulation. Clinton II 
     features a balanced budget, tax cuts, legal reform and 
     regulatory review, all forced on him by a GOP Congress. With 
     typical brass, Mr. Clinton spins this political necessity 
     into his own virtue.
       In a larger sense, today's good times have roots that 
     predate all of today's politicians. That's one point in a 
     provocative article, ``The Long Boom,'' in the July issue of 
     Wired magazine. Peter Schwartz and Peter Leyden fix the start 
     of what they call our new era of prosperity around 1980, with 
     the coming of Margaret Thatcher and Ronald Reagan, who 
     ``begin putting together the formula that eventually leads 
     toward the new economy.'' Their main hero is technology, 
     unleashed in part by the breakup of the AT&T monopoly.
       Wayne Angell, the former Fed governor now at Bear Stearns, 
     goes even further back to Taft-Hartley, which passed over 
     Truman's veto. That law gave the U.S. enough labor 
     flexibility to avoid the unemployment morass now ruining 
     Europe's welfare states.
       It's not surprising Democrats would ignore all this and 
     claim credit themselves. That's politics. They figure they 
     might take Congress in 1998 if they can claim today's good 
     times as their own. What's amazing is that Republicans are 
     letting them get away with it.

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