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Copley News Service, 06/14/2000
D.C. is awash in huge budget surpluses, and we still can't get a decent tax cut.
President Clinton neatly summed up the anti-tax cut mindset when he said, "If we squander this surplus and start spending a little here and a little yonder on tax cuts — what are we going to do when times get tough?"
With all due respect to the president, some of us — including Ronald Reagan, Art Laffer, Sen. Bill Roth and I — were around when times were tough, and across-the-board tax-rate reductions brought us out of economic stagflation, launching the age of prosperity that continues to this day. I vividly remember telling my friends in Congress and my critics in the press that economic growth is the solution to deficits, not austerity. Dramatic pro-growth tax-rate reductions did what years of so-called budget austerity could not do: balance the federal budget.
This year's federal budget surplus will be the largest ever, $224 billion, or 2.4 percent of our economy's total output. That's $815 for every man, woman and child in the United States that the federal government is overcharging American taxpayers for services rendered this year. Even worse, still larger government overcharges loom as far as the eye can see. Over the coming decade, surpluses will reach at least $4.193 trillion, or an average overcharge of $14,000 per person; that is $56,000 for each family of four in the nation. And these projections are very probably low-ball estimates.
For five consecutive years, both the executive branch's Office of Management and Budget and the Congressional Budget Office have drastically overestimated budget deficits and underestimated budget surpluses. In January 1998, CBO stated, "The federal budget is expected to be virtually balanced in 1998 and is likely to remain so for several years (through 2001)." Eight months later, the federal government reported a surplus of $69 billion. The following year, CBO revised its outlook for 1999 from a balanced budget to a surplus of $107 billion. Six months after that revision, the actual surplus came in at $124 billion. And now it is clear that only four months ago, the CBO underestimated the 2000 surplus by at least $50 billion. Stay tuned because that's not the end of the story.
In its midsession review of the budget last month, the White House admitted that total federal budget surpluses will be $1.3 trillion — that's trillion — larger over the coming decade than it anticipated only four months ago, $4.193 trillion vs. $2.919 trillion. Amazing. That $1.3 trillion underestimate is exactly the projected cost of George W. Bush's tax-cut proposal, which Al Gore has been calling a "risky scheme" because, he was trying to convince us, it would plunge the federal government back into the red.
Come on, Al. With the federal government overcharging American taxpayers so exorbitantly, the only risky scheme is not to cut tax rates and allow federal politicians to get their hands on the booty of revenue streaming into Washington. The only red in this equation is the red the American taxpayer is going to see if their elected leaders don't stop trying to bamboozle them into paying more than their money's worth for government services.
And speaking of bamboozling the American public, my favorite excuse not to cut tax rates even though the federal government is running astronomical budget surpluses is that the surpluses "aren't real." They are "only projections," and therefore we shouldn't rely on them for making policy.
Well, if we aren't going to rely on them for making policy, why do we go to all of the trouble to make them in the first place? And why do we structure the entire federal budget process around them? In fact, it wasn't very long ago that liberals were inveighing against tax-rate reductions and pressing for tax increases because projected budget deficits were so huge.
They can't have it both ways. Either they were wrong to take deficit projections seriously then and to raise taxes because they did so, or they must take surplus projections seriously today. In either case, Congress and the president owe the American people a major tax-rate cut, a rollback of the two tax increases they enacted since 1990 in the name of deficit reduction, and an ironclad pledge to move America toward the ultimate goal of tossing the tax code into the bonfire and building a new, simple, low-rate system for the 21st century.
Remember when Bill Clinton reneged on his promise of a "middle-class" tax cut and instead gave us the biggest tax increase in history, suddenly "discovering" after taking office that huge budget deficit projections were looming like a cloud of doom? Come on, guys; cut out the flimflam. If the projections of huge deficits in 1992 warranted tax increases, by the same logic, projections of huge surpluses warrant tax-rate reductions today. It is the people's money, not the politicians'.