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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 percent of all federal tax receipts, compared to 78 percent in 1980 and 61 percent in 1965. Conversely, corporate income taxes fell to 8 percent 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 long-term 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. Of course, this is not how Phil Gramm tells it. Gramm told U.S. News and World Report 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 also refuses to recognize high unemployment as a failure of his system. He prefers to view it as a failure of the individual to adjust to the system. In an interview with the National Catholic Reporter concept of unemployment has changed. We have built-in, institutional unemployment, which is higher than it has ever been: people who are unemployed because they can’t relocate or they won’t change professions or because they’re in transition. Six percent unemployment in 1950 was a situation where there were tremendous numbers of people who were actively seeking employment and weren’t finding it. Six percent unemployment today would be a situation basically where there were more people seeking employees than employees seeking jobs. ” Gramm has often exhibited a tendency to blame the victim for the crime. The economics of Phil Gramm, then, are destined to bring increasing deficits and interest rates, inflict great human suffering, and are accompanied by the increased militarization of this country. The only spending increases supported by Phil Gramm are defense spending increases \(with Government subsidization of the militaryindustrial complex is part and parcel of the state socialism for the powerful and makes the U.S. economy that much more dependent on military spending. At the same time, the rising interest rates brought on by U.S. monetarism stretch debtor nations beyond their limits and provide new theaters for military expenditures. This is the stuff once relegated to the world of jackboots and the land of Pinochet \(where Gramm’s mentors In a sense, the supply-side economics of Phil Gramm and Ronald Reagan is bringing that war home. IS PHIL GRAMM the bitter son of a low-level bureaucrat from Austria? Did some old person do him wrong? The available information says Gramm’s father was an Army sergeant partially paralyzed by a stroke. Gramm’s schooling was subsidized by government disability payments. He attended Woodward Military Academy near Atlanta and received a Ph.D. in economics from the University of Georgia in 1967, whereupon he joined the Economics Department of Texas A&M. He has served as a consultant to the U.S. Bureau of Mines, the Arms Control and Disarmament Agency, the U.S. Public Health Service, and the National Science FoundaIn 1981 Gramm supported cuts in the National Science FoundaWhile his official campaign biography will tell you that Gramm married Wendy Lee, whom he met when she was interviewing for a job in the A&M Economics Department, it does not mention that this is his second marriage, \(the first having been to a woman who taught physical education apparently not the sort of thing Gramm wants to mention when appealing to the fundamentalist crowd. Gramm first entered statewide political prominence when he challenged incumbent Senator Lloyd Bentsen for the Democratic nomination for Bentsen’s senate seat in 1976, calling Bentsen “two-faced,” claiming Bentsen presented a conservative face for Texans and a liberal face for the Washington-East Coast establishment. When Rep. Olin Teague of Texas’s Sixth Congressional District did not run for reelection in 1978, Gramm campaigned for the seat and won. His first Congressional term was marked by consistent opposition to the policies of the Carter administration. He allied himself with Reps. Jack Kemp and David Stockman in calling for huge cuts in social spending and a tax cut. When Reagan entered office, Gramm became a leader in the supply-side army. This, despite the fact that Gramm had promised the Democrats, according to Rep. Gillis Long, D-Louisiana, that he would vote with them if appointed to the House Budget Committee. “He knew he had abused his responsibility and his trust,” said Long after Gramm’s leadership of supplyside forces and his subsequent switch, in 1983, to the Republican party. The so-called Gramm-Latta Omnibus Reconciliation Act of 1981 had included spending cuts worth $6.6 billion more than Reagan had requested. In the notorious Atlantic Monthly article in which presidential advisor David Stockman admitted supply-side economics was a fancy name for a mechanism to return income to the rich, Stockman identified Gramm as the Administration’s “spy” on the Budget Committee. At that time, a southern Democratic congressman told the New Republic wipe out the social programs entirely, and that would be just fine with Phil.” Following Gramm’s switch to the Republican party and his re-election to his Congressional seat as a Republican, House Majority Leader Jim Wright, D-Fort Worth, talked about Gramm’s ambition. “I don’t envy [House Minority Leader] Bob Michel,” Wright mused. “He’ll have to hire a food taster.” Gramm’s ambition now points toward a U.S. Senate seat. Beyond that, a story circulated at the Republican National Convention is that Rep. Jack Kemp approached Gramm, saying that he was interested in a Kemp-Gramm presidential ticket for 1988, to which Gramm is said to have replied, “Gramm-Kemp.” THE ORAMM RECORD IN TRANSLATING supply-side theory into Congressional votes, Gramm has consistently voted against human needs in favor of benefits for corporations and the affluent, as well as for increased military spending. On July 21, 1981, for example, House Majority Leader Jim Wright introduced a resolution urging that necessary steps be taken to insure that Social Security benefits are not reduced for those already receiving them. Not a controversial or binding resolution. It passed, 405-13, with conservatives such as Newt Gingrich, Jim Collins, and Jack Fields voting for it. Gramm voted “No.” In 1981 Gramm also voted against the resolution disapproving the sale of AWACs to Saudi Arabia. Such voting won Gramm a 99 percent voting record for 1981 from the Conservative Coalition, making him the only Democrat and one of only four representatives to score that high. By comparison, Fields scored 96 percent, Gingrich scored 76 percent, and Larry McDonald, R-Georgia, scored 77 percent. In 1982, Gramm was the eighth highest Conservative scorer among Democrats but was the leading Democrat in terms of votes Among his stands in 1982 was Gramm’s THE TEXAS OBSERVER 27