Washington Section News - Page B3a
IMPERFECTION OF CLINTON'S ECONOMIC FORECAST IN 1993 ACCOUNTS FOR APPARENT GROWTH!
by Staff Journalists, The Daily Republican OnLine Newspaper
WASHINGTON DESK - New economic data will be released this week. Much of it will be in the news by today. The July employment report will also be published.
The Clinton Department of Commerce published its first report on second-quarter GDP growth today. Economists who have also been surveyed by The Daily Republican Newspaper are reporting the first quarter economy growth at slightly better than a 2.0% rate.
The National Association of Purchasing Management also reports on economic growth in the manufacturing sector during July. Economists surveyed report a reading below 50% in the main index indicating contraction.
Expressed as a share of the total economy, the Clinton deficit will continue to run at around the 2.0% rate.
There is a possibility of recession on the horizon. The Clinton economy continues to show signs of being headed for fiscal disaster as the baby-boom cohort moves closer to drawing Social Security and Medicare during the next five years.
The deficit report is now somewhat lower than Clinton's economists projected at the start of the Clinton presidency. There appear to be three reasons for this: First, the Clinton retroactive tax increases in the 1993 deficit-reduction package; Second, the spending cuts passed by the Republican Congress; and (3) Third, the faulty economics forecasting models of the Clinton economists.
Also, the 1993 Clinton deficit package did assume higher income and Medicare payroll taxes on the 2% of Americans who earn the highest incomes. Incidentally, tthere was also a rise in the taxable portion of Social Security checks for the 13% of recipients above a middle-income level. Don't overlook the higher corporate income tax.
Lest we forget, there was also a $ .043 per gallon increase in federal gasoline taxes.
However, the 1993 tax increases on the middle-class didn't boost revenue as much as projectedb because of tax-avoidance.
There was an increase in Medicare spending of 51% higher this fiscal year than in 1992.
Medicaid spending was up about 37% higher this year than in 1992.
Social welfare programs, and Medicare and Social Security, are both up again. And so are the full range of government services and programs.
President Clinton claims there is wave of prosperity sweeping over the nation's economy. The facts do not support that claim. Any up-tic in the present economy can be accounted for by examining the cuts made bu the 104th Congress and the normal wave-length business cycles.
Although the Clinton White House has tried to claim ownership for any positive economic sign, the president has been the 'butt' of a spate of presidential humor sweeping the nation.
Clinton has suffered a number of humorous attacks and satirical broadsides because of his shifting policy paradigms. Cartoons carried by the USA Today News brought attention to Clinton's mixed message in April of this year. Remember this one?
Clinton ultimately agreed to abide by those spending caps, and to extend them into future years. Yet, as Republicans often point out, one of his first acts as president was to push - unsuccessfully - a $16 billion stimulus package that would have breached the caps.
the GOP Congress in 1995, which cut discretionary programs significantly. By the Senate Budget Committee's count, about 6% of the past four years' deficit reduction is due to spending cuts. And the credit for three-quarters of that, says the GOP-run panel, goes to Republicans for their appropriations cuts of the past year.
While they have managed to cut deeper into those domestic programs, the Republicans are finding it isn't easy. In this election year, some of the most revolution-minded among them are dipping into the pot for the sort of parochial spending they condemned in the past as pork.
Meanwhile, overstating the Consumer Price Index by at least a percent ot two in combination with defense cutbacks have contributed to apparent deficit reduction ever since Pentagon spending reached its historic peak in 1986. In fiscal 1992, for instance, national defense accounted for $298 billion of the budget, or nearly 22% of all outlays -- and 5% of the total U.S. economy. For this fiscal year, defense gets $266 billion, or 17% of all federal outlays, and is 3.6% of the total economy. Those savings were mostly taken into account in the dismal projections at the time Mr. Clinton took office. But now, prodded by the GOP Congress, defense spending is inching up again, at least for now.
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