Page 4


most powerful lobbies in the state, the Good Roads Association, which is an amalgamation of many other powerful lobbies, that will always see that highways don’t get shortchanged, and my job is to see that other important programs perhaps more important than highways, like education do not get shortchanged and that, when we provide money for transportation, we try to do it in a way that does not add to the existing bias against local decision-makers choosing public transportation modes rather than highways. Are you familiar with Sen. Traeger’s bill changing the funding formula? \(TO, In general, and it concerns me. Again all of these programs get back to the question of fiscal responsibility. All of these programs that attempt to grab money out of the state treasury before we’re here to look at needs and tax revenues and the like and make that choice, I find very troubling. That was one of the reasons I opposed House Bill 3, which set up the current formula in 1977, because it biased state policy; it tied the hands of the legislature to a significant degree. Under spending policies for the next session, and in each session since, the highway department has gotten more, and under Sen. Traeger’s bill they would get an even larger amount. Also under his bill, there is no proposal as to how to pay for it. He’s just going to take more money out, but there’s no indication of where new revenue would come from to cover that or the other needs that money could be spent on. Do you have a sense at this point about how much money is available for teacher pay raises? I was very encouraged by Gov. White’s comments that he would not fund education out of leftovers. I think it’s vital that education be recognized as the first priority on state spending because it has not been a first priority during the time that I have served in the legislature, despite the efforts of myself and others. I think that there is money there to provide a substantial emergency teacher-pay raise and to provide some of the equalization that groups like COPS and United San Antonio are very appropriately pushing for. I would hope the governor’s budget is being designed to begin with education and then to work out to other areas. In the past it’s been education that’s gotten anything that was left over; I would go just the opposite way. What else, Lloyd, would have to happen this session for you to end your career in the Texas Legislature and hit the campaign trail with a feeling that you have accomplished what you had set out to accomplish? Well, as far as the campaign trail is concerned, I had hoped that would be a decision that would be deferred completely until after the session was over with. You never really know how the word circulating that you’re considering another office is going to impact your legislative program. There have already been, independent of campaign activities, suggestions by other members that various people were scrutinizing pieces of legislation from the Senate over in the House based on what happened, for example, with the return of Speaker Clayton’s nomination or the considera Austin Reaganomics, a combination of supply-side economics and monetarism, has challenged Keynesian, or demandside economics. Keynesian economics was designed primarily to address the problems of the Great Depression and emphasized the need for an active role for government to maintain adequate aggregate demand to achieve relatively full employment. It stressed the need for safety nets and self-help for workers and farmers in order to maintain aggregate demand and prevent depression, and for collective bargaining, agricultural cooperatives, unemployment compensation, agricultural price stabilization, social security, minimum wages all to sustain purchasing power, aid economic growth, and redress economic inequality. Despite problems, the Keynesian demand-management system worked reasonably well in preventing depressions in the U.S. and other industrial market economies in the immediate post-war period, when industrial economies operated at relatively full employment and stable prices. Average annual unemployment in the U.S. ranged between 2.9% and 7.8% during the 1950s and 1960s, averaging 4.5% during the 1950s and under 5 % during the 1960s. The finest hour for Keynesian demand management undoubtedly was the Kennedy-Johnson tax cut of 1964, which was accompanied by a decline in Ray Marshall, former U. S. Secretary of Labor, is the Rapoport Professor of Economics and Public Affairs at the LBJ School. tion of Bubba Steen for the TEC, so I think I’m going to be trying to pursue the prospect of the U.S. Senate race at the same time I’m running in the Senate from one committee to another and from one piece of legislation to another, and to try to do as much as I’ve done in the past as far as promoting necessary new legislation. I hope that one of the things that will facilitate all that is, with the new composition of the Senate, some of the people or lobby groups that were promoting really onerous pieces of special-interest legislation last session were probably dissuaded from doing so this session because they know they face more opposition. unemployment from 5.7 % in 1963 to 3.5 % in 1969. Inflation, as measured by the CPI, was less than 1% in the early 1960s, but accelerated to about 5% during the Vietnam buildup in the last half of the 1960s. Despite its apparent successes \(which prompted even Richard Nixon to declare mand management became less effective in the 1970s world of intensified global interdependence, low productivity growth, “stagflation,” and slow growth in total output. The Keynesians could not deal very effectively with structural changes, and their policies created inflationary biases in the economy. Because of their preoccupation with massive unemployment, the Keynesians gave inadequate attention to inflation, resources, productivity, efficiency, and sectoral and structural problems. Supply-side economics begins with radical, regressive tax and budget cuts to stimulate savings and investment.According to the Joint Economic Committee in 1982, when the tax cuts are fully effective, families with incomes of $200,000 will get $30,000 in tax cuts while families making $15,000 will get a $385 tax cut. The net effect of spending and tax cuts by 1984 will be to reduce the net incomes of families with incomes below $10,000 by $220 and increase those with incomes of over $80,000 by $19,230. Taking into account bracket creep, social security taxes, and local taxes, families earning $30,000 and less will pay more taxes and have less take-home pay under the Reagan program. Substantial reduction in business taxes are also provided, espec Reaganomics at Mid-Term By Ray Marshall THE TEXAS OBSERVER 19