CyberAlert -- 08/06/1996 -- Tax Hikes Good

Tax Hikes Good; Tax Cuts Bad

The number one truism of the media: Tax hikes good; tax cuts bad. The latest evidence:

1) Last Friday CBS economics correspondent Ray Brady reported that President Clinton's tax hike was responsible for lower interest rates, a smaller deficit and a jobs boom.

2) Before Bob Dole presented his tax cut plan Washington Week in Review and USA Today delivered pre-emptive strikes.

3) Once Dole had outlined his plan CNN brought on Susan Dentzer of U.S. News & World Report to discuss it and NBC Nightly News asked reporter Mike Jensen about it -- both denounced it and relayed a false history of Reaganomics. NBC's Mike Jensen: Economists "say say these tax cuts could cause huge budget deficits as they did during the Reagan years."


For the Friday, August 2 CBS Evening News, Ray Brady reviewed Clinton's economic record. As transcribed by our staff back in Virginia, here's the second half of his story:
After a soundbite of Senator Connie Mack (R-Florida), charging, "President Clinton's economic policies have robbed the American economy of its full potential," Brady reported: "Sure the Administration slowed growth, but it did it with a giant tax increase. 241 billion dollars, the biggest in ten years. But look at what happened. That tax money went into the treasury, government had to borrow less, so interest rates stayed low. That in turn fueled the bull market and the economy, both creating new companies and new jobs. But President Clinton has not solved the country's top problem entitlement. The huge cost of Medicaid and Medicare."
Note that he's "solved" everything but entitlements.


Ken Bode, CNN's political analyst, offered his opinion of tax cuts as he moderated Washington Week in Review on July 26: "Americans might remember that the last time we tried to grow our way out of the deficit, that the tax cut happened, the growth didn't happen and the deficit was huge at the end of it. How are they going to explain this new version of supply side?"

Headline in the August 5 USA Today: "Dole's Tax Plan Could Backfire, Experts Say: Deficits, interest rates could rise."


Minutes after Dole completed his speech in Chicago on Monday, CNN interviewed Susan Dentzer of U.S. News and World Report. She's no fan of tax cuts or of those who would like one: "I think it's going to sell very well among those who, for one thing, think that government is taxing them too heavily and don't have a calculator, don't particularly care about the details of federal fiscal policy and don't particularly want to add up the dimensions of the problem or stare into the future that we know we face. We know that the future fiscal situation for whoever is president, come January, is going to be getting worse not getting better. A lot of people are not necessarily aware of it, but it's very clear that if we stay on our current path, the budget deficit widens, it doesn't get narrower, and the notion that in that kind of environment we could pass a very large tax cut, strains all kinds of credibility. Nonetheless, there a lot of people who don't want to hear that, they want to see the government shrunk, they want to believe they can get a tax cut and everything will be fine."
Later on ABC's Nightline she called it "a free lunch."

On NBC Nightly News Monday night reporter David Bloom declared: "Most economists say the Reagan tax cuts did worsen the budget deficit and many are skeptical of Dole's plan." As transcribed here in San Diego by MRC analyst Steve Kaminski, NBC's Mike Jensen concluded the subsequent piece by looking at what economists think: "They say these tax cuts could cause huge budget deficits as they did during the Reagan years, debt that would have to be paid off by future generations. Brian."
This exchange followed:
Anchor Brian Williams: "Mike, what about this issue that's been around a longtime, the cut in the capital gains tax?"
Jensen: "Well, that would favor the rich and the well-off, people with investments, they'd be the big winners."
Williams: "What about the $500 per child tax cut?"
Jensen: "Well, not really very good economics, good for families with kids. A family wih three children would be able to take $1,500 off its tax bill -- but it's very preferential, retirees wouldn't benefit and people without children wouldn't benefit."
Williams: "Overall, in the hours since this has been announced, in what you've been able to gather so far today, is this good economics?"
Jensen: "Brian, most analysts say it's not good economics. Bob Dole says about a fourth of the tax cuts would be paid for by an expanding economy, but the rest would have to come from spending cuts and those haven't been spelled out yet."

Here's a brief reality check, from Ed Rubenstein in his Right Data book: "Since 1980, aggregate federal tax revenues have grown 111 percent. Had revenues grown at the rate of inflation, the government would have collected $225 billion fewer dollars in 1992. Congress spent the additional money, and then some....The Republican record 1980-92: Social welfare spending rose 44 percent. Defense spending rose 30 percent."

If the media weren't so biased Steve, Gene Eliasen and I would be off to the beach. -- Brent Baker