Commentary: An earnest attack on the US deficit
Tuesday 16 February 1993
For Mr Reagan, the strategy was highly effective. His State of the Union address brought so positive a public response that resistance in Congress and from special interest groups was all but swept away. Mr Clinton may find the going much tougher. Unlike Mr Reagan, he is not offering tax cuts but tax increases with cuts in government spending. The message is one of shared sacrifice, which will come in a variety of forms.
The first to hurt will be the very rich, for whom the tax rate is expected to rise from 31 to 36 per cent. Corporation taxes will also go up, and the middle classes will be asked to accept an additional burden, probably through increased energy taxation. Wealthier retirees will be made to pay more tax on their social security benefits. The spending cuts will mainly hit the military, although the President has tried to set an example by pruning a quarter of the White House staff and 100,000 other Washington jobs.
All this amounts to what looks like an earnest attempt finally to tackle the federal deficit. The best guess is that the package should roughly halve the deficit - to dollars 145bn - over the four years of Mr Clinton's term. That depends, of course, on Congress accepting the prescription and resisting the inevitable pressure from lobby groups to pick it apart. A Gallup poll yesterday suggested the electorate was divided exactly down the middle on whether sacrifice was necessary to ensure recovery and new jobs.
The other plank of the package - a dollars 31bn economic stimulus initiative split between business tax breaks and infrastructure spending - may win public favour quite easily. Its worth, however, is questionable - if only because it sends a conflicting signal about Mr Clinton's seriousness over cutting the deficit and resisting the tax-and-spend urge. With accumulating signs that the US economy has at long last begun a sustainable expansion, the best policy is patience.
- 1 Howard Jacobson: Let’s see the 'criticism' of Israel for what it really is
- 2 Gingers face extinction due to climate change, scientists warn
- 4 Pornhub pleads with users to stop uploading videos of Brazil 'getting f**ked by Germany' in the World Cup
Jennifer Lawrence face palms Emma Watson at Christian Dior show in Paris
Gingers face extinction due to climate change, scientists warn
Pamplona Running of the Bulls 2014: Briton critically injured in San Fermin festival
Elephant 'cries' while being rescued after 50 years of abuse in India
Google executive died on yacht after prostitute gave him fatal dose of heroin, say police
Sustained immigration has not harmed Britons' employment, say government advisers
British jihadist calls for 'flag of Islam' over Downing Street and Buckingham Palace
Australia facing international condemnation after turning around Sri Lankans at sea
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
There’s a nasty smell in the political air – and it’s coming from the Tories
iJobs Money & Business
£55000 - £65000 per annum + excellent package & bonus expectations: Real Staff...
£80000 - £90000 per annum + competitive: Real Staffing: A highly successful Co...
£40000 - £50000 per annum + highly competitive package: Real Staffing: An oppo...
Highly competitive: Real Staffing: VP - Operational Compliance - Global BankA ...