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 # 17 - November 1, 1995 * David A. Ridenour and Karen Kerrigan, Editors
The New Math: When a Spending Hike is Called a Spending Cut
Critics of the GOP budget -- which include President Clinton, his allies in Congress and in the media, and now even presidential candidate and former conservative commentator Patrick Buchanan -- are apparently using a "New Math." They've argued that it is unfair to "cut" Medicare benefits for elderly Americans, while other wasteful programs are spared. Only in Washington could a spending increase be labeled a spending "cut." Under the GOP plan, spending per beneficiary would rise from $4,800 in 1995 to $6,700 in 2002 -- and could actually be higher, according to a recent Congressional Budget Office estimate. That's a 40% increase over seven years, far greater than the anticipated inflation rate during the period. Using this "New Math," the cost of a new Ford Explorer could rise by $10,838 by 2002 and dealerships would still be able to claim they were offering huge savings over 1995 prices. Such deceptive advertising would make even a car dealer blush. If Republicans can be faulted, it is for not doing enough to deliver real cuts -- not for cutting too much.
Real World Investment Pros Scoff at Treasury Secretary Rubin's "Train Wreck" Scenario
Top Wall Street analysts briefed Capitol Hill today about the so-called budget "train wreck" vis-a-vis the debt ceiling limitation, and the Administration's claims of dire consequences for U.S. financial markets. At a Heritage Foundation event, Stanley Druckenmiller, manager of the Soros Fund, derided such catastrophic predictions. Several leading investment experts, members of the Small Business Survival Committee, have also responded to Rubin's prognostication:
"In our opinion, the financial markets are up strong since last November because they are correctly anticipating less government and lower taxes... If the markets were concerned, particularly the bond market, interest rates would have moved up long before now... Long term, the financial markets care much more about tax policy (by a wide margin) than any other single issue... Lower taxes mean lower interest rates, stronger economic growth, and higher stock prices... Now, if Congress fails to pass a significant tax cut, then we would be worried." -- Mark J. Deschaine, President and Chief Investment Officer, Investment Counselors Inc.
"The world's financial markets have made clear their strong disapproval of congressional spending through a clear inverse correlation between spending (or proposing to spend) and the value of the dollar -- a proxy for the U.S.'s credit rating. With each new spending bill, such as the Crime Bill or the failed BBA [Balanced Budget Amendment], the dollar tanks... If Congress truly wants to prevent a 'train wreck' they had better pursue this balanced budget proposal -- full steam ahead." -- James C. Kennedy, Kennedy Capital Management, Inc. For more information, call the Small Business Survival Committee at (202)785-0238.
Two Dozen Groups Call for Grant Reform -- Now
More than two dozen organizations have signed a letter to Congress supporting "No Welfare for Lobbyists" grant reform. The letter says: "American taxpayers provided more than $39 billion... to organizations which may use the money to advance their political agendas... At a time when our nation suffers from record debt and deficits, it makes no sense to give money to organizations that turn around and lobby the government, often for more taxpayer money."
Small Business Survival Foundation
1320 18th Street, N.W.
Washington, D.C. 20036
The National Center for Public Policy Research
501 Capitol Ct NE
Washington, D.C. 20002
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