What Gramm advocates is a state socialism for the rich with wholesale reductions in corporate income taxes and personal income taxes in the upper brackets. His economics includes all sorts of inducements and incentives for corporate expansion at the expense of small business. With the tax burden shifted to the middle and lower income brackets, accompanied by a reduction in services for those brackets, lateral and upward mobility for those brackets is greatly restricted. With policies encouraging the expansion of corporations into areas providing the cheapest labor, including foreign sources, the power of U.S. labor diminishes. Robert S. McIntyre and Dean C. Tipps of the Center on Budget and Policy Priorities have analyzed the effects of the supply-side program instituted in 1981. Rather than spurring business investment, corporate tax cuts in 1981 led to a decline of 7 % in investments in plants and equipment in 1982. A great deal of the money saved by corporations was used instead diminish the so-called free market. Top executive salaries and dividend payments rose dramatically in 1981. The tax cuts did not stimulate more investment, say McIntyre and Tipps, because they brought with them a growing federal deficit, which drives up interest rates as the government becomes a competitor for an ever greater share of available credit. Rising long-term rates discourage investment in plants and equipment and favor those holding capital to lend. According to McIntyre and Tipps, tax equity usually leads to growth while great inequity inevitably leads to trouble. By 1987, personal income tax and Social Security payroll taxes will account for 85 % of all federal tax receipts, compared to 78% in 1980 and 61% in 1965. Conversely, corporate income taxes fell to 8% of the federal income in 1982 after having provided a quarter of that income in the 1950s and ’60s. The 1981 tax cuts made for bad economics in that business investment decisions were based on tax incentives rather than on economic merit. The supply-side tax cuts, say McIntyre and Tipps, “created a bias for machines over labor even when labor is more efficient, fueled unprecedented longterm federal deficits that pushed up real interest rates and stifled investment, and led to deeper cuts in needed public spending on physical and human capital.” That’s the insidious underbelly of Phil Gramm’s brand of economics. Not only do the poor and the middle-class suffer from an unfair tax structure, but the deficits created by that tax structure make it impossible for the government to respond to the deprivation caused by an inequitable system. In a supply-side economy, freedom of action is reserved for those with capital. Of course, this is not how Phil Gramm tells it. Gramm told U.S. News and World Report only constraints on the future of mankind is unbridled government. Resources are inexhaustible when imagination combines with freedom of action.” In a supply-side economy, freedom of action is reserved for those with capital. Gramm Speaks On Social Security minimum benefits: “Then Claude Pepper got up and said, ‘There are 80year-old people who are going to be denied this $110 a month.’ “I got up and said, ‘They are 80 years old. Most people don’t have the luxury of living to be 80 years old, so it’s hard for me to feel sorry for them.’ ” The Woodlands Villager In answer to a question concerning whether the deregulation of natural gas would have devastating economic consequences, raising utility bills for homeowners, businesses, and schools: “No, I don’t accept that. Any policy has winners and losers.” U.S. News and World Report From a 1983 Republican press release distributed to the Tennessee Congressional District of Rep. Albert Gore, Jr., concerning Gore’s vote against a Gramm amendment prohibiting the distribution of International Monetary Fund money to “communist dictatorshps” \(an amendment also opposed by Rea”In this vote, we had a clear choice: prevent the hardearned money of the working people of this country from going to Communist dictatorships or support Communism. Obviously Albert Gore chose to support Communism rather than the people of this country.” New Republic On a Dallas Morning News article about a family rationing its food to avoid hunger: “Did you see the picture? Here are these people who are skimping to avoid hunger, and they are all fat! [He laughs.] In fact, in an unguarded moment, this picture induced me to point out the other day that because of the perverse impact of food stamps where we force people to buy food when, given a choice, they would choose to spend the aid we give them on other things, that we’re the only nation in the world where all our poor people are fat.” September 3, 1981. Cleburne Civic Center \(TO, On Social Security and Medicare cuts restricting the self-sufficiency of the elderly: An elderly black woman tells Gramm, “It’s easier to tell an old person, ‘Well, why don’t you go to a convalescent home?’ If you are able to look after yourself, if you just could get somewhere to live until you die, that’s better than people puttin’ you in a home and people forgettin’ about you .” “You haven’t thought about a new husband, have you?” Gramm asks, smiling. “My husband hasn’t been here for four years,” the woman says. “I’m just kidding,” the congressman assures her and moves on to the next question. September 3, 1981. Corsicana Public Library \(TO, THE TEXAS OBSERVER 3
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