ustxtxb_obs_1984_08_17_50_00007-00000_000.pdf

Effects on 1984 Household Incomes of Tax and Benefit Changes in 1981-1983 Household Income less than $10,000 $10,000-20,000 $20,000-40,000 $40,000-80,000 $80,000 and over All Household Tax Reduction $ 150 550 1,200 2,440 18,980 1,210 Benefit Reductions $-430 300 170 140 160 230 Total Change $ 280 250 1,030 2,300 18,820 1,190 As Percent of Household Income 5.6% 1.7 3.4 3.8 9.4 4.0 Source: Congressional Budget Office and testimony before Senate Budget Committee. Reagan addressing Austin rally. billion in 1980 to $189 billion in 1984. Now they’re saying they’ll need another four years to do it. Don’t believe it under current policies, the deficits are projected to rise to over $300 billion by 1989. The national debt will more than triple, from $715 billion in 1980 to $2,638 billion in 1989. The Republicans promised that inflation and interest rates would decline without a recession as a result of their tight monetary policies. In fact, the Fed’s actions in 1981 to limit money supply growth choked the economy and helped create the recession of 1981-82. Tight money, combined with the massive Federal deficits, created the high interest rate environment that still hamstrings business investment and undermines the competitive position of U.S. goods in international markets. Reagan promised that total Federal spending would be sharply cut declining to 19.3 percent of GNP in 1984. Instead, spending hit a peacetime record 24.7 percent of GNP in 1983 and will be 23.9 percent in 1984 because increased spending on defense and interest payments from the deficit rose even faster than the Republicans cut spending on other programs. Reagan promised a tax program that would be “across-the-board” and fair. Instead, only corporations and the wealthy received significant tax cuts. Taxpayers with incomes above $50,000 had their Federal tax burdens cut significantly. But, after account is taken of inflation and higher payroll taxes, the tax burdens for taxpayers in the middleincome range of $15,000-$50,000 stayed about the same; poorer taxpayers saw their tax burdens actually increase. The Republicans promised a safety net to protect the needy, but the poverty rate under Reagan rose by 26.6 percent. The budget deficits and the high interest rates they produce have increased the cost of dollars compared to foreign currencies by more than 38 percent since January 1981. This has hobbled American exports and helped foreign imports, crippling industries such as autos and steel, at the cost, of two million jobs. Between 1982 and 1985 the U.S. will borrow $250 billion abroad, turning us from the world’s strongest creditor to a net debtor nation. Every other administration, Democratic or Republican, has done better. President Reagan cites statistics on economic recovery and falling unemployment to show that “1983 was a banner year,” and says, “America is back.” Of course, any recovery would look good after the deep and destructive recession of 1981-1982. And even unemployment of 7’/2 percent to 8 percent in 1984 is an improvement on the record 10.7 percent reached during the recession. But real GNP has improved less since Reagan’s inauguration than it did over the same period for any postwar President. ‘ The Budget Republicans are always quick to claim that the current deficits result from previous Democratic excesses. The nonpartisan Congressional Budget Of1981, prior to the adoption of the Republican tax and spending programs, the CBO estimated the level of federal spending and revenues under thencurrent policy. They forecast a cumulative $202 billion federal budget surplus that’s right, a surplus over the That projection assumed that all nondefense programs would be adjusted for inflation and caseload changes \(such as more Social Security retirees and spending was assumed to increase 3 percent above the rate of inflation, consistent with our commitment to our NATO allies. But the recession, fostered by Republican fiscal and monetary policies, quickly put an end to the projected budget surplus. With fewer people working and more people receiving unemployment benefits and food stamps, $654 billion of red ink had to be added to the projected budgets. The Republicans compounded the problem. The 1981 tax cuts added $323 billion in deficits. The Reagan military buildup has added another $79 billion. Combine this with the added interest costs to finance these higher deficits, and it completely overwhelms the $192 billion in deficit reductions approved by Congress. Republican policies turned a cumulative $202 billion surplus into $692 billion of red ink. Things have gotten so bad under the ,Republican program that we could eliminate all domestic discretionary spending this year and still be left with a deficit of some $30 billion. In other words, you could totally eliminate the Departments of Agriculture, Commerce, Education, Energy, Housing and Urban Development, Interior, Justice, Labor, State, and Transportation as well as EPA, NASA, the Veterans Administration, the Congress, and the Federal courts and still have a deficit! The policies of the Reagan administration have given this country the largest and fastest increase in the public debt in history. Exactly three years after his inauguration, the debt had risen to $1.433 trillion, an increase of almost $500 billion. By the end of FY 1984, CBO estimates it will be $1.590 trillion. After less than one term as President, Mr. Reagan will have increased the debt by $650 billion. And under his budget plan, it will continue rising to $3.1 trillion in just five years! This is a per capita debt of $12,520, nearly triple the 1981 level. It took the first 39 presidents THE TEXAS OBSERVER 7 Pho to by Ala n Pog ue