Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, July 28, 1994 TAG: 9407280074
SECTION: EDITORIAL PAGE: A14 EDITION: METRO
SOURCE:
DATELINE: LENGTH: Medium
Unfortuantely, in addressing one of the bigger policy issues of the day, the federal budget, Coleman's stance betrays a lack of fiscal integrity.
In a recent position statement on tax reduction, he misreads the lessons of the '80s, ignores the lessons of the '90s, and strangely accepts the discredited supply-side assumption that tax cuts equal increased revenues equal balanced federal budgets.
They don't. That much was proved by the burgeoning deficits following the Reagan tax cuts of the early '80s.
From 1980 to 1992, national debt swelled from about one-third the size of gross domestic product to more than two-thirds. From 1980 to 1992, federal debt service doubled as a percentage of federal spending (to 20 percent).
The '80s prosperity of which Coleman speaks was a credit-card spree that couldn't last, and its legacy of debt continues to erode the nation's well-being while inhibiting needed initiatives and investments.
Part 1 of the fiscal lesson of the '90s and the Clinton administration - so far, anyway - has been that deficit-reduction progress can be made without hurling the nation into recession. If projections are met for the '95 budget, the deficit relative to the size of the economy will be back to pre-1980 levels.
That's a sizable "if," though, and is still not enough to stop the growth of the debt. Part 2 of the '90s fiscal lesson is that deficit reduction isn't easy, and is apt to get harder. On the spending side, the bulk of the budget goes for defense; for middle-class entitlement outlays, whose beneficiaries scream for help and get it when budget-cutters dare to brandish knives; and for servicing the debt. On the revenue side, higher taxes are about as popular as you'd expect them to be.
In its separate parts, Coleman's tax-policy position is not without merits.
His call for repeal of the retroactive portions of last year's income-tax increases is partisan hooey. Income-tax changes are routinely made retroactive to the first of the year; in this instance, though Coleman does not mention it, the rate increase affected only very top-income taxpayers who made out like bandits during the Reagan era. Meantime, Clinton has given low-income taxpayers a break with a broader earned-income tax credit.
A case can be made for reducing the capital-gains tax rate, as Coleman proposes. Also, for targeting any tax cuts toward middle-income families with dependent children, as he proposes, perhaps by increasing the personal exemption or providing a tax credit for each child.
But an honest case demands that such proposals be accompanied either by equivalent spending cuts, clearly specified and doable, or by tax increases elsewhere to replace the forgone revenue and avoid adding to future generations' debt burden.
Unlike Sen. Charles Robb, who has proposed a 50-cent increase in the federal gas tax, Coleman so far offers nothing to help balance the books.
If only we could lose weight on a diet of ice cream and chocolate cake, and erase deficits with tax cuts. Wouldn't that be nice?
Keywords:
POLITICS
by CNB