Clinton's Veto of the Republican Tax Cut of 1999

For someone rhetorically hell.bent on ending shallow partisan bickering, Bill Clinton's veto of the
$800 billion tax cut sent to him by Congress, and the rhetoric attached to the veto is decidedly very
peculiar. Worse, the diatribe is resoundingly partisan, as was the vote on the tax cut in both houses
of the Congress. Voting in the Congress was almost unanimously partisan. One might think that
there finally is developing some genuine distinction between the parties!

But the verbal assaults on the tax cut and those who voted for it is incredible. It may sound like
a huge cut, but it is actually a very limited measure. The total of almost $ 800 billion is spread out
over a ten year span with most of the reductions coming late in the time frame. It is also rather
consumption or demand oriented for a Republican plan. It includes such provisions as ending
the marriage penalty. Just on the numbers themselves, it amounts to very small change. The federal
budget should average at least $ 2 trillion over the next ten years, totalling some $ 20 trillion over
that decade. That works out in toto to something like a 4 % reduction in taxes over the period!

To call that a budget buster is absurd. But it is not merely that the Democrats want tax cuts at a
lower level. They say the GOP wouldn't compromise and that they would have been willing to accept
something on the order of $ 300 billion in cuts. They also wanted targeted tax cuts, not across the
board reductions. What that means is that if they have to accept cuts in tax rates, they must
micromanage them. And if it is difficult to accept the notion that this is all simply about bigger
government, let us not forget Clinton's scheme to take the social security surplus and have the
government invest it in Wall Street. After ten years of that, the federal government would own
virtually all the outstanding stock in the country, even as prices rose initially with the added demand
of government for their purchase. We would have had socialism instituted, and not merely been
moving in that direction.

Mr. Clinton spoke of the Republican unwillingness to learn from their failed policies of the past
in pushing such tax cuts, apparently unwilling or unable to see that Reagan's villified tax cuts
led to increased revenue for the government, along with sustained economic growth and development
on them. This is something that other nations have learned well in cutting their marginal tax rates.
At the same time that Clinton is spouting such nonsense, in fact, Brazil's President Cardozo is
calling for dramatic reductions in highest marginal tax rates to stimulate investment and expansion
in Brazil.

Clinton wants to use the 'surplus' he has created to make social security and medicare more secure.
Clinton has had nothing to do with it. Had his proposals passed, we would not even appear to have
a balanced budget. Only the increased strength of the Repulicans has moved the budget in that
direction. But the budget is not balanced at all in reality. It only appears to be because of the
social security budget surplus which more than offsets the general budget deficit. While in the
short term, the economy will respond as if the budget is balanced on that fact, in the long term,
social security and medicare are going to move into deficit, and barring huge tax hikes to fund it,
the government will have to resort to a second wave of deficit spending to finance the responsibilities
of those programs. While it may appear noble of Clinton to be so worried about the two programs,
the pirating of the trust funds and the charade of covering the real deficit with them hardly
is going to make either more secure in the long term. In fact, if he were genuinely concerned about
the government having sufficient revenue to cover the costs of the programs ten years hence, he
would be supporting the tax cuts so that the economic growth and development they would stimulate
would add enough revenue to government coffers to cover them; that, and working to hold the line
on the runaway entitlement costs that are driving up the actual deficit and paving the road to the
impending crisis in funding.

But what Clinton and the Democrats want is more and expanded programs and bureaucracy. And
their perception is that the tax cuts will impinge on their ability to have them. If he appeared to
accept the inverse relationship between tax rate changes and marginal revenue generated on them
in going along with the Republican plan to cut capital gains taxes last year, he had apparently forgotten
that now.

The rhetoric is the same as it has been. Republicans are seeking to undercut the poor and working
people of the country with their schemes to favor the rich. Never mind reality. But in recent years,
Republicans have been tagged with slashing spending that was not cut, seeking cuts that were
actually increasing spending, and wanting old and sick people to die in the streets. Nonsensical
as that is, it appears to have been swallowed by a substantial element of the electorate, or at least
liberal politicians and media types want to believe that is so. How else could Clinton have won election
and remained in office for reelection? That of course ignores the impact of the Perot and Buchanan
campaigns on the outcome of the last two Presidential contests. But, clearly, reality has very little
to do with it. It is about power, and that rests on the ability to spend. After all, when Clinton 'won'
reductions in medicare and social security, they were billed as reduced increases that helped preserve
their integrity, though they differed little from the villified objectives of the Republican lawmakers.

With respectful apologies to the late Republican Congressman Sonny Bono, 'the cheat goes on.'
It is, after all, 'their' money!

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