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Democrats Reach for the 1992 Election Playbook
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Press Release

Democrats Reach for the 1992 Election Playbook

Suddenly, the election is once again about George Bush, taxes, and the economy. Déjà vu? No, call it “It’s the Economy Stupid, Part II.” But as Democrats attempt to revisit the winning election playbook that brought Bill Clinton to office, they’re discovering that things are a little different this time around. What’s a Democrat candidate to do? They can’t really oppose Bush on terrorism or eliminating Saddam Hussein. Their attempts to use scare tactics on Social Security reform have mostly failed. The Enron-style corporate corruption issue is mostly on hold, thanks to a sweeping new reform bill. And new polling shows that the economy and jobs are the top issues of concern to Americans. So, last week, the Democrat leaders launched a vigorous new attack on George Bush’s “handling of the economy.” Typical was Tom Daschle’s (D-SD) rip that “…there has not been such catastrophic mismanagement of America's economy since the presidency of Herbert Hoover." Of course, markets are still down, growth is flat, and it’s not like Washington Republicans have been disciplined lately when it comes to the U.S. budget. But while there might be some fertile ground for political gains here, unlike in 1992, Democrats are discovering they’re in a box on the economy issue. Democrats might attack the orgy of irresponsible new spending in Washington. Doing so would probably get support among independents (remember Ross Perot’s charts?) and work against Republicans on their base. But the Democrats are just as, if not more, responsible for Washington’s current spending binge as the GOP. More important, Dems are also disarmed on taxes; unlike his tax-raising dad, George W. Bush is cutting them. In the absence of a coherent policy vision, the Democrats go to their old election stand-by: scaring senior citizens. Consider the AP’s description of the new ads they’re running nationwide on the economy: In one of the ads, a young husband is getting ready for work with his wife in the background. She asks him: "So, first day of the new job, ready for the big adventure?" And he responds: "Ready as I'll ever be." The narrator then talks about "$175 billion in savings gone, over 2 million jobs lost. Many seniors starting over, looking for work." The ad…cuts to a senior citizen getting ready for work with his wife in the background. "So, first day of the new job, ready for the big adventure?" she asks him, and he shrugs and replies: "Ready as I'll ever be."

10/23/2002
Gephardt’s Ploy to Grow Government, Not the Economy
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Press Release

Gephardt’s Ploy to Grow Government, Not the Economy

The Democrats are finally trying to present an agenda to improve America’s economic growth. It’s about time. While we welcome the debate, the early signs are that, when it comes to the economy, the Democratic leadership—- some of the biggest tax-and-spenders in Congress—- still doesn’t get it.

10/16/2002
Legislating at the Margins
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Press Release

Legislating at the Margins

Capitol Hill This Week…. Both sides of the Capitol continue to seek an exit strategy this week as the election looms three short weeks away. Hopes for adjourning sine die (for the year) have faded as a lame duck session has become all but inevitable. It is expected that both the House and Senate will consider a longer term Continuing Resolution (CR) this week. The past few resolutions have provided only a week of funding but this latest will probably take them through the elections until November 22nd. In the meantime, expectations for this week are low. The House only expects to take up the CR, and a possible tax bill this week. There are still some conference reports (Energy, Terrorism Re-insurance, Homeland Security) that may come up, but it is doubtful.

10/15/2002
A Legacy of Spending
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Press Release

A Legacy of Spending

With the Bush administration’s sights trained on Iraq, problems on the home front remain to be addressed. Wall Street is hitting 15-year lows, corporate scandals have jarred investor confidence, and a weak market has Americans worried about job security. In Washington, Congress continues its spending spree as members race to finalize spending bills before the November election. Surpluses are a thing of the past, with the federal deficit pushing $160 billion and counting. A recent poll found a majority of Americans have serious concerns about the U.S. economy and believe that heightened foreign policy concerns have come at the expense of sound economic policies here at home.

10/08/2002
New Report Card on State Governors
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Press Release

New Report Card on State Governors

Against the backdrop of the worst state budget crunch in years, this report presents the findings of Cato Institute’s sixth biennial fiscal policy report card on the nation’s governors. The report card’s grading is based on 17 objective measures of each governor’s fiscal performance. Governors who have cut taxes and spending the most receive the highest grades. Those who have increased spending and taxes the most receive the lowest grades.

10/07/2002
Latest Update from Capitol Hill
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Press Release

Latest Update from Capitol Hill

Just a quick note to provide everyone with a Congressional update. I would say legislative update but that would be a misnomer since there really is not that much legitimate legislation going on up on Capitol Hill.

10/04/2002
Tom Daschle’s Spectacular Budget Disappearing Act!
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Press Release

Tom Daschle’s Spectacular Budget Disappearing Act!

It’s not the Greatest Show on Earth, but the federal budget is definitely the most expensive circus in the world. All the more so this year, thanks to some nifty new tricks from ringleader Sen. Tom Daschle (D - S.D.). Every year, Congress is required to pass an overall plan for U.S. government spending, known as a budget resolution. The budget was due this year on April 15, 2002, and to meet this deadline, President Bush offered his budget plan last February. And the House of Representatives passed its budget in March.

09/25/2002
Decisions, Decisions
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Press Release

Decisions, Decisions

This Week – Both the House and Senate took Monday off for the observance of Yom Kippur. They expect to hit the ground running on Tuesday when the Senate resumes consideration of H.R. 5093, The Interior Appropriations Act. They will also continue to debate H.R. 5005, The Homeland Security Act, which the President has repeatedly asked for before the November elections. The House will consider legislation that would block states from restricting interest rates on rent-to-own transactions (H.R. 1701) and legislation to make the repeal of the estate tax permanent.

09/17/2002
Stand Down Mode
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Press Release

Stand Down Mode

The Republican staff director of the House Appropriations Committee announced on Monday that the House of Representatives was in a “stand down” mode. Congress is just over two weeks away from its scheduled final adjournment, and not one of the annual appropriations bills has been sent to the president. The Senate hasn’t even passed a budget resolution. And they are in a “stand down” mode?

09/17/2002
Like Monkeys With Darts
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Like Monkeys With Darts

BY Jason M. Thomas

When George W. Bush was sworn in as the 43rd president of the United States, the Congressional Budget Office [CBO] estimated the federal budget for fiscal 2002 would be in surplus by an eye-popping $405 billion. Last week, the CBO issued its latest estimate for 2002: a $157 billion deficit. In just more than 19 months in office, President Bush has overseen a $552 billion swing in the 2002 budget and an estimated $7 trillion deterioration of the federal government's 10-year fiscal outlook. Such a reversal of fortune is staggering and could be a political liability for the president's party in this November's midterm elections. Democrats have been quick to blame the Bush tax cut for the deficits, but according to the CBO figures, only $74 billion, or 13.5 percent of the accounting change is attributable to the tax cut. Increases in discretionary spending [14.1 percent] - some of it to finance military reprisals to the September 11 attacks - and the economic downturn [17.8 percent] both dwarfed the fiscal effect of the tax cut, as Republicans will be sure to point out on the campaign trail. But, as math majors have already discovered, the aforementioned economic and legislative developments account for less than 50 percent of the change in the overall budget. The biggest factor in the dramatic reassessment has been what the CBO calls "technical changes," completely unrelated to any federal policy. The CBO describes these changes as adjustments to economic and tax policy assumptions, which is a nice way of saying their estimates were just plain wrong. This should not be surprising. Budget estimates are exceedingly difficult to make, even for the next year. In addition to unreliable forecasts of economic activity, federal budget estimates must rely on speculation about how much tax revenue such activity can be expected to yield. Stock market observers often joke about how the average analysts' stock picks are no better than if a monkey were to throw darts at the newspaper's financial pages. To get a sense of the reliability of CBO estimates, spin the monkey three times beforehand. As John Barry of the Tax Foundation points out in a recent memo, the CBO's March 1997 prediction for the 2002 deficit was much more accurate [$188 billion] than the estimate made just last year. Mr. Barry argues, sensibly, that "federal deficit estimates are no basis for tax policy," as "margins of error of 50 percent or greater are typical." Voters should be wary when politicians treat speculative forecasts of volatile budgets as gospel. Instead, policymakers should use more reliable estimates and hard numbers whenever possible. For instance, when determining the appropriate level of taxation and spending, instead of looking to unreliable budget estimates lawmakers should consider the relationship between federal tax receipts and spending to gross domestic product [GDP]. President Bush's tax cut was not good policy because CBO calculations estimated a $5.4 trillion surplus over 10 years; it was good policy because federal tax receipts had grown to 20.3 percent of GDP, a peacetime record. It was this dramatic growth in taxes relative to the economy - not sound fiscal management as some would have us believe - that led to the budget surpluses of recent years. While it is true that a $290 billion deficit in 1992 was turned into a $236 billion budget surplus in 2000, federal spending grew more than 35 percent during that time and was only held that low because the 1995-96 conservative Republican majority was willing to shut down the government to keep growth below 2 percent for a single fiscal year. Budget estimates will never be abandoned because they can serve a useful purpose. The U.S. Treasury needs a sense of how much bonded debt it must issue to cover federal spending and can use deficit projections when deciding what type of debt to issue and how much to make available for auction. But in the hands of opportunistic politicians, budget projections can be a dangerous, albeit misleading, rhetorical weapon. The CBO does as good a job forecasting deficits and surpluses as any private or public economic research group in the country, but it would be nice if politicians included the same disclaimers as CBO when using its numbers. Of course, this will not happen until politicians eschew distortion as a political weapon, an outcome about as likely as this year's CBO forecast for the 2012 budget deficit. Jason M. Thomas is a staff economist at Citizens for a Sound Economy Foundation.

09/12/2002

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