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, E-mail [email protected]

Issue # 21 - December 7, 1995 * David A. Ridenour and Karen Kerrigan, Editors

Hill Watch: Update on Budgetary Issues on Capitol Hill

"Coalition Budget" is Budget Without a Coalition Plan
Would Harken Back to Days "Bracket Creep"

"Conservative" House members continue to push their "Coalition Budget" (CB) as the starting point for budget negotiations with the White House. Some Republican lawmakers are reportedly beginning to buy into this idea. Touted as a "no tax cut plan," the CB actually calls for a tax increase. It would do so by eliminating indexation of tax brackets, one of the centerpieces of President Reagan's pro-growth tax reform plan approved in the early 1980s that helped produce the nation's longest period of sustained economic growth in American history. According to Ray Keating, Chief Economist of the Small Business Survival Committee, such indexation stopped "bracket creep" -- a process by which Americans lucky enough to receive raises to keep pace with inflation were forced into higher and higher tax brackets even though their real incomes remained the same or even declined. The elimination of tax indexation isn't the only problem with the Coalition Budget: It would cut discretionary spending by $86 billion less than the GOP plan, it contains no tax relief or economic growth provisions, it would maintain the status quo on welfare and would fail to ensure Medicare solvency. As the White House contemplate which elements of the CB it will incorporate into its own seven-year plan, it would be wise to remember this: The original CB received only 72 votes in the House of Representatives. In other words, the Coalition Budget is a budget without a coalition.

Where Are the GOP's Draconian Cuts?

The big government lobby continues to argue that the GOP's seven-year plan calls for huge cuts in social welfare programs to fund tax cuts for the wealthy and increases in defense spending. It does not: In fact, Defense programs are among the few federal programs that would be cut. Over the next seven years, Defense spending would total $1.8 trillion, down from $2.02 trillion the previous seven years. Meanwhile, welfare programs would rise from $492 billion over the past seven years to $878 billion over the next seven years; Medicare Plus spending would rise from $926 billion to $1.65 trillion; and education, job training and student loan spending would rise from $315.1 billion to $340.8 billion. Expenditures on natural resources and the environment would decline by a mere two-tenths of one percent over the next seven years compared with the previous seven. And how would the President restructure the GOP plan to make it more to his liking? No one knows... He still hasn't released his plan to balance the budget in seven years.

Government Spending Broken Down:

Defense: Spending Over Last 7 Years = $2.017 trillion
GOP Spending Over Next 7 Years = $1.87 trillion; that's a $146.8 billion decrease

Education, Job Training, and Student Loans: Spending Over Last 7 Years = $315 billion
GOP Spending Over Next 7 Years = $340.8 billion; that's a $25.7 billion increase

Medicare Plus: Spending Over Last 7 Years = $926 billion
GOP Spending Over Next 7 Years = $1.65 trillion; that's a $724 billion increase

Medigrant: Spending Over Last 7 Years = $443 billion
GOP Spending Over Next 7 Years = $791 billion; that's a $348 billion increase

Environment: Spending Over Last 7 Years = $134 billion
GOP Spending Over Next 7 Years = $132 billion; that's only a $3.2 billion decrease

Veterans: Spending Over Last 7 Years = $235.4 billion
GOP Spending Over Next 7 Years = $276 billion; that's a $40.6 billion increase

Welfare: Spending Over Last 7 Years = $492 billion
GOP Spending Over Next 7 Years = 878 billion; that's a $386 billion increase

Waste Watch: Where Government Can Slim Down

Feds Spend $600,000 to Teach Drivers Why They Shouldn't Run Red Lights

This past August, Transportation Secretary Federico Pena announced a $600,000 education and prevention program to reduce the number of Americans who run red lights. The Transportation Secretary said the program is needed because motorists running red lights are to blame for $7 billion in damage, medical bills and lost work time each year. Among the 32 communities that will receive a share of $600,000 are such traffic-congested areas as Black Hawk County, Iowa.

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 eptf@national[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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