Budget Watch

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 # 20 - November 30, 1995 * David A. Ridenour and Karen Kerrigan, Editors

The Cost of Doing Nothing: The Price We Will Pay if We Fail to Act Today

Union Chiefs to Workers: Drop Dead Unions Oppose Budget Plan That Would Boost Union Jobs, Membership

Trade union leaders have been among the most vocal opponents of the Republicans' seven-year plan to balance the budget. But it now appears that they have been working against their own best interests.

According to economists of the Heritage Foundation, approval of Congress's plan to balance the budget would result in the sale of 600,000 more automobiles over seven years than under current law. Who would benefit from these sales, pray tell? Those who build them -- members of the United Auto Workers.

But trade union members aren't the only ones who would benefit from Congress's seven-year balanced budget plan. Using a widely accepted model of the U.S. economy developed by Laurence H. Meyer and Associates, Heritage Foundation economists found that under Congress's plan:

Trade union leaders' opposition to the seven-year budget plan -- in direct conflict with the best interests of the workers they represent -- does explain one recent phenomenon: Declining union membership.

The Estate Tax -- A Hostile Government Takeover

Common sense dictates that class envy is a poor foundation upon which to build a tax code -- sound economics is preferable. Yet, opponents of tax cuts are still chanting their "tax cuts for the rich" mantra. The Republican budget plan increases the estate tax exemption from $600,000 to $750,000 over a seven-year period and excludes $1 million in small business assets from the estate tax. Studies show that the estate tax is a big money loser for government: In 1994, estate and gift taxes accounted for a mere 1.2% of total federal government receipts ($15.2 billion). Estimates conservatively show that 75% of estate and gift tax collections are offset by compliance and litigation costs of the IRS and Treasury. The big pay off? Jobs and family-owned businesses are killed -- in fact, 60% of these businesses fail to make it to the second generation and 90% do not make it to the third generation. Estate taxes are partly to blame. For more information, call the Small Business Survival Committee at (202)785-0238.

Hill Watch: Update on Budgetary Issues on Capitol Hill

The "Non-Essential" Agency: 89% of Department of Education's Employees Deemed "Non-Essential"

During the recent government shut-down, the Department of Education (DOE) sent over 5,000 of its employees -- equal to 89% of its total work force -- home, deeming them "non-essential" employees. Given the DOE's record over the years, it's no wonder: In international skills surveys, American nine-year-olds ranked ninth in mathematics just ahead of Slovenia while American 13-year-olds ranked 12th in science just ahead of Ireland and Jordan. This abysmal record resulted despite the fact that DOE's budget has risen from $14 billion in 1980 to $33 billion today. Rep. Steve Chabot (R-OH) has introduced the Back to Basics Education Reform Act (H.R. 1883) to abolish the Department of Education and return responsibility and authority to parents, teachers and communities. Contact Rep. Chabot's office at (202)225-2216.

Small Business Survival Foundation
1320 18th Street, N.W.
Washington, D.C. 20036
(202)785-0238
Fax: (202)822-8118

The National Center for Public Policy Research
501 Capitol Ct NE
Washington, D.C. 20002
(202) 543-4110
Fax: (202)543-5975
E-mail [email protected]

Nothing written here should be construed as an attempt to help or hinder legislation before the U.S. Congress.

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