A newsletter covering budget reform and the latest news and views on the federal budget, published by The National Center for Public Policy Research, 20 F Street NW, Suite 700 , Washington, D.C. 20001, (202) 507-6398, Fax (301) 498-1301, E-mail [email protected], Web http://www.nationalcenter.org and the Small Business Survival Foundation, 1320 18th St. NW, Washington, D.C. 20036, (202) 785-0238, Fax (202) 822-8118, Web http://www.sbsc.org.
Issue #29 * January 23, 1997 * David A. Ridenour and Karen Kerrigan, Editors
Earlier this week, the Senate Republican leadership issued a "legislative priorities list" that named the Balanced Budget Amendment -- which was defeated narrowly in the last Congress -- as their number one priority. According to Hill sources, a vote on the Amendment could come as early as mid-February. If approved, the Balanced Budget Amendment could save American families thousands of dollars each year in interest payments. According to a DRI-McGraw Hill study, balancing the budget could produce a 2% drop in interest rates. Such a drop would produce annual savings of $2,160 on a $100,000 mortgage (with 15% down), $180 on an average automobile loan and $216 on an average student loan. Many Americans no doubt believe that the Senate has its priorities straight.
What a Balanced Budget Could Mean to American Families...
Aided by the media, Capitol Hill budget cutters are building expectations that they will end "corporate welfare" as we know it. House Budget Committee Chairman John Kasich has assembled groups on both the left and right to identify by consensus good corporate welfare candidates for the chopping block. Meanwhile, the Clinton Administration will likely use the public outcry against corporate welfare to advance through the back door a series of corporate tax hikes. It's beginning to look like the corporate welfare issue could fall victim to a hostile takeover. For one thing, it is unclear what definition of corporate welfare will prevail, the President's or Hill budget-cutters. It is also unclear whether or not the left-right coalition assembled by Chairman Kasich will propose significant cuts. The Cato Institute has identified $75 billion in corporate welfare spending cuts, but there is strong doubt that the coalition will have the political will to tackle even a quarter of that. For a taxpayer's/free market definition of corporate welfare, please contact Peter Ferrara of Americans for Tax Reform at 202/785-0266.
If President Clinton's plan to address the District of Columbia's fiscal crisis is any indication, his forthcoming budget will contain wasteful spending that rewards incompetence, mismanagement and corruption. While the President's plan would terminate the city's $660 million annual payment from the federal government, the federal government would in return pay the tab for the $5 billion gap in D.C.'s city pension system, assume responsibility for the city's prison and tax systems, pick up the tab for a significantly larger portion of the city's Medicaid costs, and pay for other city government functions. Quite a bargain -- if you're the D.C. government. The Clinton Administration has apparently bought into the idea that the District suffers from "structural unfairness": City coffers are supposedly short because it is neither able to tax commuters nor assess taxes on the 41% of the city area occupied by the federal government. But according to the Alexis deTocqueville Institute's John Berthoud, if anything, the federal government is a boon to the city. "...[What] if the federal government packed up an moved off to Topeka?," asked Berthoud in an Investors' Business Daily opinion/editorial. "The district would lose the millions generated by government operations and tourism and shrivel to almost nothing." Despite having a higher per capita income than any state in the nation ($32,274 in 1995) and an exorbitant top income tax rate of 9.5%, the District of Columbia is unable to pay its expenses. The reason? Its operation costs rose by 54% after inflation between 1980 and 1990. By rewarding the District's chronic mismanagement with more federal dollars, President Clinton may have given us a foretaste of his budget to come -- more taxes and more spending. For more information on the President's budget plan for the District of Columbia, contact John Berthoud at 703/351/4969.
Small Business Survival Committee Foundation * 1320 18th Street, N.W. * Washington, D.C. 20036 * (202)785-0238 * Fax: (202)822-8118 * Web http://www.sbsc.org. * The National Center for Public Policy Research * 501 Capitol Ct NE * Washington, D.C. 20001 * (202) 507-6398 * Fax: (301) 498-1301 * E-mail [email protected] * Web http://www.nationalcenter.org. * Nothing written here should be construed as an attempt to help or hinder legislation before the U.S. Congress. Reprints of material in Budget Watch is permitted provided that original source is credited.
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