[Congressional Record Volume 143, Number 118 (Tuesday, September 9, 1997)]
[Extensions of Remarks]
[Pages E1698-E1699]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                       CURRENT ECONOMIC EXPANSION

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                         HON. MICHAEL G. OXLEY

                                of ohio

                    in the house of representatives

                       Tuesday, September 9, 1997

  Mr. OXLEY. Mr. Speaker, for those who missed it during the August 
recess, I would like to bring a column by James K. Glassman of the 
American Enterprise Institute to the attention of my colleagues. The 
subject of the piece is the current economic expansion.
  The most important economic lesson Ronald Reagan taught us is that 
high tax rates inevitably discourage investment and productivity. The 
theory behind reducing taxes remains perfectly sound--namely, that 
people will have a greater incentive to engage in fruitful enterprise 
if the government confiscates less of their earnings.
  Through deregulation, privatization, and across-the-board tax cuts, 
Ronald Reagan unleashed the longest economic expansion in U.S. 
peacetime history. He also inaugurated a new era of American enterprise 
and prosperity.
  The author is right on target when it comes to attacks on so-called 
trickle-down economics. What the opponents of supply-side tax cuts are 
really assailing is the simple idea of allowing people to keep more of 
their own money, so they may invest capital, hire workers, and produce 
goods and services.
  Although I would, of course, give the Congress more credit than does 
the author for the prevailing economic figures, I could not agree more 
that President Reagan set it all in motion. I would only remind him 
that the same principles guide today's Congress and, whether they like 
it or not, members of the current administration.
  Again Mr. Speaker, I commend the following column by Jim Glassman to 
the attention of all interested parties.

              [From the Washington Post, August 12, 1997]

                            The Reagan Boom

                         (By James K. Glassman)

       Whose economy is this anyway?
       Both President Clinton and Congress are eager to take 
     credit for our 3 percent GDP growth, 4.8 percent unemployment 
     and 2.3 percent inflation--amazing figures, all.

[[Page E1699]]

       But government doesn't make things or sell them. People and 
     the companies they create do. What has happened in the past 
     15 years is that businesses are making things (and providing 
     services) better and cheaper. Through risk-taking, hard work, 
     good management and the exercise of sheet talent, the economy 
     is booming.
       What have Washington politicians done to effect this 
     success? Practically nothing, except to have the sense, 
     occasionally, to get out of the way. President Clinton and 
     Hill leaders are little more than supernumeraries, bit 
     players in this great economic opera, but they still can't 
     resist shoving to the front of the stage for the curtain 
     calls.
       For instance, last week, it was particularly annoying to 
     see both Republicans and Democrats reveling in the balanced 
     budget deal--as though this fictive creation were 
     revitalizing the economy.
       The truth is precisely the opposite: It's the economy that 
     is balancing the budget, not the budget that is boosting the 
     economy. The reason the deficit has fallen from $290 billion 
     in 1992 to $34 billion this year is that a tidal wave of tax 
     revenues, generated by the private sector, has washed into 
     the U.S. Treasury.
       The figures are astounding. In fiscal 1992, the government 
     collected $1,090 billion in taxes. This year, which ends 
     Sept. 30, it will collect $1,578 billion, according to new 
     estimates by the Congressional Budget Office.
       Tax receipts are up 45 percent in five years, while 
     inflation has risen only 14 percent.
       In other words, the government is taking in $488 billion 
     more in 1997 than it did five years ago. Unfortunately, it is 
     also spending $231 billion more. If that rise in spending has 
     only been kept down to the rise in inflation, we'd be running 
     a surplus of about $50 billion this year.
       This flood of cash is not the result of higher tax rates. 
     Yes, Bill Clinton imposed some increases in 1993, but they 
     were paltry compared with Ronald Reagan's cuts in 1981 and 
     1986. The top rate, pre-Reagan, was 70 percent on 
     ``unearned'' (meaning investment) income, 50 percent on 
     earned income and 35 percent on capital gains. Those rates 
     have fallen to a maximum of 39.6 percent for income and 28 
     percent (now 20 percent) for capital gains.
       And what's happened? Revenues poured in, just as the 
     supply-side economists predicted they would. In 1980, 
     government tax receipts were only $517 billion. Since then, 
     they've risen 205 percent, while consumer prices are up just 
     85 percent.
       If not higher tax rates, then what's the reason for the 
     increase in revenues? Businesses are generating more profits, 
     hiring more workers and compensating them better. And 
     government gets a lower percentage of a much higher take.
       But why are businesses doing so well? The best answers may 
     come from the people who run them. Last month, Investor's 
     Business Daily commissioned a survey of 200 CEOs and chief 
     financial officers from the nation's largest publicly traded 
     firms. They were asked, ``What triggered recent economic 
     growth?''
       Leading the list: productivity (making more with less). 
     Second: Federal Reserve policies, which have helped keep 
     inflation low. Next, in order: information technology, 
     restructuring and globalization.
       The first politician to appear on the list was Ronald 
     Reagan, in sixth place. His policies were credited by 26 
     percent of the CEOs and CFOs as triggering the surge in 
     growth. Farther down the list, at 14 percent, were ``Bush 
     policies.'' And near the bottom, at 8 percent, were ``Clinton 
     policies.''
       Now, I'll admit these captains of industry have GOP 
     leanings, and their answers may be self-serving. But their 
     answers have the force of logic.
       Consider Silicon Valley, subject of a cover story in 
     Business Week. How did it ``reach its zenith?'' the magazine 
     asks.
       ``What we found was a huge brain trust, companies galore to 
     service the tech machine, and a daredevil, risk-taking 
     culture.'' No mention of an increasingly irrelevant 
     Washington.
       In fact, the CEOs and CFOs have it right. Reagan is the 
     only politician who deserves credit for the rebirth of the 
     American economy. But at his Aug. 6 press conference, Clinton 
     could not resist taking a swipe at him. ``In 1993,'' he said, 
     ``we abandoned supply-side, trickle-down economics.'' 
     Nonsense.
       Supply-side economics is still with us, and it's performed 
     as advertised. In fact, the past 15 years, the longest 
     stretch in U.S. history with just one shallow recession, 
     should be called the Reagan Boom.
       The incentives of lower tax rates and deregulation have 
     encouraged more risk-taking, less diversion of valuable 
     resources into tax shelters, more sensible investment and 
     work.
       Revisionism dominates the press today, but the facts were 
     clear nearly a decade ago. ``Measured in 1982-84 dollars, the 
     income tax revenue collected from the top 10 percent of 
     earners rose from $150.6 billion in 1981 to $199.8 billion in 
     1988, an increase of 32.7 percent,'' wrote James D. Gwartney 
     of Florida State University in the ``Fortune Encyclopedia of 
     Economics.'' ``In effect, lower rates soaked the rich.''
       The current flood of revenues is merely one result of what 
     is literally a supply-side boom. For all this, politicians 
     shouldn't be congratulating themselves. They should be 
     thanking the robust private sector, plus, of course, Ronald 
     Wilson Reagan.

     

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