[Congressional Record Volume 146, Number 138 (Saturday, October 28, 2000)]
[Extensions of Remarks]
[Page E1994]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page E1994]]
              JANE BRYANT QUINN DENOUNCES MASSIVE TAX CUTS

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                          HON. JOHN J. LaFALCE

                              of new york

                    in the house of representatives

                        Friday, October 27, 2000

  Mr. LaFALCE. Mr. Speaker, in this Congress and on the campaign trail, 
Republicans are amply demonstrating that they are the party of fiscal 
irresponsibility. The Republican congressional leadership and the 
Republican presidential candidate have cynically plied the slogan ``its 
your money`` to justify massive and wreckless tax cuts, most of which 
would go only to the wealthiest Americans. I submit for the record a 
recent column by the respected financial columnist Jane Bryant Quinn, 
which explains why it is so important to maintain budget surpluses and 
resist the political appeal of massive tax cuts.

             Don't Be Too Quick To Demand a Federal Tax Cut

                          (Jane Bryant Quinn)

       So you want a big tax cut because the government surplus is 
     ours and we should get it back?
       That's nice. But remember that the government's public debt 
     belongs to us, too.
       The debt grew over many decades, for spending we liked and 
     spending we didn't like (lefties and righties, fill in the 
     good and evil spending of your choice). Mostly, it grew 
     during recessions and wars.
       Today, there's a consensus that the total debt should be 
     reduced. But how can we do that and get a big tax cut, too?
       I have a modest proposal. It's inspired by those who argue 
     for privatizing more of the government's functions. I propose 
     that we privatize the debt.
       We should all get big tax cuts. But each cut should be 
     packaged with a proportionate piece of the public debt. 
     That's the true libertarian way.
       Do I hear you say that you don't want your piece of the 
     debt on your personal balance sheet? You're for collective 
     responsibility after all?
       In that case, I have something else to say. It's in our 
     collective interest that the government run surpluses today, 
     rather than opt for big tax cuts or big new spending 
     programs. These surpluses are our principal source of new 
     investment capital for business modernization and growth.
       To raise money to invest for the future, businesses have to 
     draw on national savings. But on average, individual 
     Americans aren't saving a dime. We're spending everything we 
     earn (in some months, more than we earn).
       So where are the new savings coming from, for business use? 
     From the surplus. Few people
       Here's how that happens, as explained by Nobel Prize-
     winning economist Robert Solow, in the Oct. 5 issue of the 
     New York Review of Books:
       In years when the government spends more than it collects 
     in taxes, it borrows the extra money it needs from the 
     investing public (U.S. and foreign individuals and 
     institutions).
       It borrows by selling us Treasury bills and bonds. When we 
     buy them, money shifts from the private sector to the 
     government sector, to finance public purchasing and programs.
       Lately, the government has been collecting more in taxes 
     than it needs to cover spending. The surplus reduces the need 
     for debt. Some of those Treasury bills and bonds are being 
     retired or redeemed.
       When that happens, the institutions that own them have to 
     replace them with something else. Often, they switch to 
     corporate bonds (and perhaps some equities). So the money 
     moves out of the government's hands, back into the private 
     sector.
       Running surpluses hurts an economy in recessionary times. 
     But in prosperous times, it's a pro-growth, pro-investment 
     choice.
       Follow along with me here because this principle becomes 
     central to financing Social Security and Medicare when the 
     baby boomers retire.
       Reducing the federal debt today--injecting more savings 
     into the private economy--helps businesses buy more up-to-
     date equipment and take advantage of technological advances.
       That makes workers more productive and raises their real 
     incomes. As a result, they'll be able to cover more of the 
     cost of supporting the older generation.
       What's more, by working down the debt, the nation will have 
     more room to borrow the money back, in the years when the 
     boomers are straining the federal budget the most.
       So we're choosing between using up this money now (in big 
     tax cuts, higher spending and higher personal consumption) or 
     investing it for the future. To me, that's a no-brainer. 
     Invest, by paying down the debt.

     

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