A newsletter covering budget reform and the latest news and views on the federal budget, published by The National Center for Public Policy Research, 501 Capitol Court, N.E., Washington, D.C. 20002 (202) 543-4110, Fax (202) 543-5975, and the Small Business Survival Foundation, 1320 18th St. NW, Washington, D.C. 20036 (202) 785-0238, Fax (202) 822-8118.
Issue # 15 - October 19, 1995 * David A. Ridenour and Karen Kerrigan, Editors
Davis-Bacon Repeal Pulled From Reconciliation -- Republican Leadership Hands Labor Unions Key Victory
Despite the Labor movement's long history of political support for Democrats and vocal opposition to Republican initiatives (including the "Contract with America"), GOP leaders in the House decided to pull language repealing Davis-Bacon from this year's budget reconciliation. Repeal language would have allowed market forces to determine wage rates on federal government construction projects rather than bureaucrats in Washington in consultation with labor unions. Just last week, NBC Nightly News ran a follow-up piece on Davis-Bacon, exposing fraud in the wage survey process in Oklahoma. In a letter to Speaker Gingrich, the Coalition to Repeal Davis-Bacon expressed dissatisfaction that the leadership would not terminate the 60-year-old Jim Crow relic. "The public scorn for the law as well as the significant savings associated with repeal will undoubtedly keep this issue before you," stated the letter.
Poor, Working Class Benefit Most from Cap Gains Tax Cut
According to the CATO Institute in a recently released study, poor and working class Americans would benefit the most from capital gains tax cuts. Not only would the disadvantaged benefit from greater economic opportunities that would result from a cut in the capital gains tax, but such a cut would increase the proportion of the total tax burden that wealthy Americans would shoulder. "Over the past thirty years, every time the capital gains tax has been raised, tax payments by wealthy Americans have fallen. Every time the tax rate has been cut, tax payments by the wealthy have substantially risen," say economists Stephen Moore and John Silvia, authors of the new report. Moore and Silvia estimate that there are currently more than $7 trillion in unrealized capital gains. Unlocking just ten percent of those gains through a tax cut would generate $150 billion in added revenues that could be applied against the deficit. The economic opportunities offered to the disadvantaged would also be enormous. For example, venture capital funds -- one measure of new business formation -- rose from $68 million in 1977 when the tax rate was 49% to almost $5.1 billion in 1983 when it was just 20% (see chart). For more information or copies of the CATO Institute study, "The ABCs of the Capital Gains Tax," contact Robin Hulsey of the CATO Institute at (202)789-5293.
Republicans Made Me Do It -- Clinton Blames '93 Tax Hike on GOP
Speaking before a wealthy group of political supporters in Houston, President Clinton admitted he raised their taxes "too much" and probably should have cut spending more. Little mention was made of the President's original budget plan sent to Capitol Hill lawmakers that would have raised taxes even higher. Clinton then went on to blame Republicans for not helping him cut spending (something he is against doing now). Clinton appears to have torn a page out of the 'ol Arkansas campaign play book when he was thrown out of the statehouse for raising taxes as Governor. In his reelection bid, the ousted Clinton ran a mea culpa campaign admitting his wrongdoing -- he was then reelected to the statehouse. If Clinton so regrets his decision to raise taxes -- observers are saying -- he should advocate repeal of the '93 tax hike.
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