Clinton's Options ( The Economic Pearl Harbor of 1993 )

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Broward Horne

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Feb 11, 1993, 1:11:18 PM2/11/93
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Okay, a brief summary of "tax options" leaked by Clinton & Co:
( hold on to your hats, pals )

Reprinted without permission from Associated Press

" In the face of such daunting figures, the budget office's options
show that deficit-reduction pain would have to be borne by more
than just the rich:

X Boosting the top income-tax rate for individuals from its
current 31 percent to 33 percent would raise $24 Billion
over the next four years. Clnton is expected to try to
raise the top rate, paid by the most affluent Americans,
to 36 percent

X Raising the top rate on corporations from 34 percent to 35
percent would garner $11.3 Billion for the government over
four years. Clinton is considering a 36 percent upper rate.

X Increasing the alternative minimum tax paid by the wealthy
from 24 perent to 28 percent would raise $17.1 Billion over
four years.

X Reduce the current $1 Million cap on mortgages on which
taxpayers can deduct interest to $300,000: $9 Billion [raised]

X Tax employer-paid health insurance premiums exceeding $400
per month for families and $165 monthly for individuals:
$79 Billion [raised]

X Higher taxes on alcohol and tobacco products. Doubling the
24 cent-per-pack cigarette tax would raise $14.3 Billion.
The government could raise $17.9 Billion by increasing the
tax on a six-pack of beer from 33 cents to 81 cents, the tax
on a bottle of wine from 21 cents to 70 cents, and the tax on
a bottle of hard liquor from $2.14 to $2.54.

X Energy taxes. A 5 percent tax on energy would raise $71.4
Billion.

X Scale back nuclear weapons research and halt testing:
$600 Million

X Reduce from 14 to 10 the number of aircraft carrier battle
groups: $8.4 Billion

X Reduce military aid and economic foreign aid: $1.2 Billion

X Cancel the space station and superconducting super collider:
$9.7 Billion

X Reduce anti-drug law enforcement efforts: $6.8 Billion

X Reduce deficiency payments to farmers: $7.1 Billion

X Reduce federal interest subsidies for Stafford loans to
college students: $7.4 Billion

X Increase the montly premium Medicare recepients pay for
doctors' services by 5 percent: $20.1 Billion "

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Okay. Add 'em all up. I make it around $350 Billion over four years,
either in increased revenues or decreased spending. At current
deficit levels, our total deficit over 4 years will be $300 Billion
* 4 years = $1.2 Trillion.

Okay. So enacting ALL of these options would cut the deficit by
25%. Let's give the benefit of the doubt. Make it FIFTY percent.

Now. Look over each item.

Example: Shutting down carrier groups. More people laid off
and less Federal revenues.

Energy taxes - Carter proposed a similar idea in the late 70s.
Studies suggest that economic growth would be slowed, due to
higher energy costs by 1/2 to 1% of GDP. Result: Less Federal
revenues through taxes.

Reduce anti-drug law enforcement. Result: More layoffs, less
Federal revenue.

And I'm SURE that these estimated "tax enhancement measures" assume
a static economy that won't react. Like people buying WAY less
gasoline. Or selling that $500K house to move to Omaha, Neb.

I'm highly interested to hear what President Clinton has to say
on Febuarary 17, 1993.

Matt Landrum

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Feb 12, 1993, 3:43:46 PM2/12/93
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In article <930211181...@inet-gw-1.pa.dec.com> GCTH...@idbsu.idbsu.edu (Broward Horne) writes:

[stuff deleted]

Let me first start off by saying that I had a problem with several of those
"revenue increasers"....

-------------------------------------------------------------------------

Okay. Add 'em all up. I make it around $350 Billion over four years,
either in increased revenues or decreased spending. At current
deficit levels, our total deficit over 4 years will be $300 Billion
* 4 years = $1.2 Trillion.

I take it that you assume that we will have 0 growth in the economy?

Okay. So enacting ALL of these options would cut the deficit by
25%. Let's give the benefit of the doubt. Make it FIFTY percent.

Now. Look over each item.

Example: Shutting down carrier groups. More people laid off
and less Federal revenues.

We really can't make assumptions like this unless we know how they
arrived at these numbers. I'll play along for fun. We may have less
revenue but we'll have less people on the government payroll, building
up pension, and generating health care costs. Most of those qualified
people will find another job, because they have been taught good
leadership skills and have ambition. I would rather see them cut
more from expensive weapon systems than cut personnel (yes, I realize
that might cost civilian jobs, but I think there is a lot more waste
in these programs).

Energy taxes - Carter proposed a similar idea in the late 70s.
Studies suggest that economic growth would be slowed, due to
higher energy costs by 1/2 to 1% of GDP. Result: Less Federal
revenues through taxes.

Less health care costs (one of the fastest rising costs today) for
people getting sick from breathing polluted air (man, I sound like a
good bleeding-heart on that one).

Reduce anti-drug law enforcement. Result: More layoffs, less
Federal revenue.

Less tax dollars spent to house non-violent criminals. Drug
enforcement officers put to work solving murders and robberies, saving
us even more tax dollars.

And I'm SURE that these estimated "tax enhancement measures" assume
a static economy that won't react. Like people buying WAY less
gasoline. Or selling that $500K house to move to Omaha, Neb.

Oh no, people buying less gasoline! That might take profits away from
the oil companies and give them to people developing alternative fuel
sources or electric cars. I think we could raise the tax on gas a lot
before we actually got a decrease in revenues (not that I'm ferit, I'm
agin it). What's that matter with selling your $500k house and moving
to Nebraska? I'm personally sick of subsidizing all you people with
houses and kids anyway :-) All my loopholes have been yanked and my
social security taxes have been raised.

I'm highly interested to hear what President Clinton has to say
on Febuarary 17, 1993.

Well, I hope you'll look at the issue from both sides.
--


Matt Landrum, CAD Engineer | e-mail: m...@cypress.com
Cypress Southeast Design Center | office: (601) 324-4609, FAX - 4614
1 Research Blvd, Suite 200 | "You can get what you want if you
Starkville, MS 39759 | know how to find it." -- Tower of Power


Dave Borden

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Feb 16, 1993, 2:02:28 PM2/16/93
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In article <930211181...@inet-gw-1.pa.dec.com>, GCTH...@idbsu.idbsu.edu (Broward Horne) writes:

> Example: Shutting down carrier groups. More people laid off
> and less Federal revenues.

This is the case with any cut in spending, or any increase in efficiency.
Companies lay off workers that they don't need, hospitals improve their
computerization and lay off office staff, etc. But it's temporary pain, and
necessary. It's misguided to think that the government should continue to employ
people who's services aren't needed. We need to become more efficient, convert
our war-based economy to a peactime economy. The freed-up capital in the economy
eventually gets invested in new, hopefully more economically productive ways;
another way to say this is that people who lose their jobs due to increases in
efficiency or cuts in services that are no longer needed, become employed in jobs
that are more valuable to society, with the effect of raising our overall
standard of living. It's pointless to employ people at jobs that aren't needed;
it's far better in the long run to suffer through it now and make them get jobs
doing things that are needed more.
That being said, it's nice to do things to make the transition less painful,
like gradually phasing things out with warning rather than cutting them quickly,
and having things like retraining, unemployment insurance, etc. But the
transition has to be made, one way or the other. Otherwise, we'll just hurt
ourselves in the long run by pouring more and more money into services we don't
need. The drop in federal revenue is temporary; the unemployed find jobs and the
economy does better in the long run.

> Energy taxes - Carter proposed a similar idea in the late 70s.
> Studies suggest that economic growth would be slowed, due to
> higher energy costs by 1/2 to 1% of GDP. Result: Less Federal
> revenues through taxes.

A lot of economists think that an energy tax, or the right kind of energy tax,
would enhance our growth by reducing the flow of capital leaving the country, in
the form of oil purchases.

> Reduce anti-drug law enforcement. Result: More layoffs, less
> Federal revenue.

The drug policy we have now is insane, and should be terminated ASAP. We should
get the DEA and the military out of Central and South America, where they are
wasting a tremendous amount of resources on a hopeless strategy (actually making
things worse in some ways). We should shift our resources to education to
prevent drug addiction, treatment to cure it, and when people can't be cured, to
showing how to live normal lives despite their addiction. This is what they're
doing in England, and it's working. And as above, the people who lose their jobs
when this misguided policy is ended, will eventually find other jobs doing other
things (maybe like fighting real crime), and we'll all be better off.

Transitions are painful. But we have to cut spending, we have to raise more
revenue, and we have to convert the war-based economy to a peacetime economy.
Of course we should keep whatever defense programs we need, which will probably
be substantial for a long time. But they are getting less, and some of them,
like SDI, were never needed in the first place. An unneeded defense program is
just as economically harmful as any other type of inefficiency.

A question to the original poster, or to anyone else. The figures that you
listed which were "over four years" - are those total savings over four years, or
annual amounts that we can attain by the end of a four-year transitional period.
I'm not claiming tha they are - I really don't know the answer and I'd like to.

- Dave Borden
bor...@m5.harvard.edu

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