Kenneth, you are long on opinion and short on facts...
The Heritage analysis indicates that, compared with how the economy would have performed without the 1993 tax legislation, Clinton's 1993 tax and budget plan will have:
Cost the economy $208 billion in output from 1993 through 1996,4 in today's dollars.5 This lost output is equal to nearly $2,100 for every household in America. Last year, without the 1993 economic package, gross domestic product (GDP) would have grown $66 billion more than it actually did absent the change.
Cut the number of private jobs created by 1.2 million between 1993 and the end of 1996. Including the forecast for 1997, the total employment cost of the 1993 tax increase grows to nearly 1.4 million lost job opportunities.6
Delivered only 49 percent of the new revenues predicted by the Congressional Budget Office from the increase in personal and corporate tax rates between FY 1994 and FY 1996. When compared with the 1.2 million lost jobs, the tax hike has depressed potential employment growth by 17,600 jobs for every $1 billion it achieved in deficit reduction.
Cut $112 billion, in today's dollars, out of potential employee wages and salaries between 1993 and 1996.
Cut the growth in real personal disposable income of Americans by $264 billion in today's dollars between 1993 and 1996 -- equal to over $2,600 less disposable income for every household in America.
Cut the potential sale of automobiles by 773,700 and light trucks by 504,000 between 1993 and 1996. Some 1.1 million of the nearly 1.3 million lost vehicle sales would have been produced domestically. In 1996, Heritage calculates that this loss in auto and truck sales will cost a projected 60,100 jobs across all industries.
Cut the value of business investment in durable goods by $42.5 billion in today's dollars; $15.4 billion of this is lost investment in computers.
Some proponents may argue that even if the economy is not performing up to its potential today, this slow growth period is necessary to reduce federal deficit spending which, in turn, will promote greater future growth. Yet many respected economists maintain that this will not be the case with the 1993 tax increase and budget deal: Increased taxes (and particularly increased marginal tax rates) will permanently decrease economic activity below its potential.7 Similarly, the Heritage analysis, using the WUMM economic model and forecasts of future economic activity, supports this theory. According to the Heritage analysis, nearly every major economic indicator is projected to be weaker under current law than would have been possible without passage of the 1993 tax increase and budget act between now and 2004.
Specifically:
Gross domestic product is projected to be lower in each year. In 2004 alone, GDP is projected to be $122.5 billion lower in today's dollars than would have been possible without passage of the 1993 tax increase and budget deal.
Real personal disposable income is projected to be lower each year. In 2004 alone, Americans will see $142 billion less in disposable income than would be possible without the 1993 tax increase and budget deal.
In short, American workers are right to feel that they should be better off today than they are. President Clinton's 1993 economic plan turns out to have deprived Americans of a higher standard of living by cutting the economy's growth potential, leading to a slower rise in employee compensation, household income, industrial output, and most other measures of a prosperous economy.
heritage.org |
