THE November election will likely swing on how to invigorate the
ailing United States economy. Both the Clinton-Gore and the
Bush-Quayle campaign platforms are faced with a rapidly changing,
post-cold-war world and a US economy that no longer fits the old
policy maps. The crying need of both campaigns is to
reconceptualize the economy and rethink the federal budget and tax
As new maps are drawn, surprising new directions can emerge: for
example, cutting income taxes and replacing them with more taxes on
pollution (so-called "green taxes"), more user fees, corporate
taxes and tariffs, and a restructured budget.
This approach may refocus the question: Where is all the money
coming from to reinvest in our people, infrastructure, and global
competitiveness - while creating more jobs and addressing a
pressing backlog of social and environmental problems?
The Clinton-Gore answer is familiar: Raise taxes on the richest,
close loopholes, increase some user fees, and emphasize investment
over consumption in fiscal policy.
Mr. Bush still believes, despite mounting unemployment and the
lowest interest rates since the Kennedy era, that "recovery is on
its way." His classical "trickle-down" economics holds that jobs
are best created by making investment more attractive to those who
can invest (through better capital gains treatment, for example).
Both platforms, so far, embrace incrementalism. They call for
more investment tax credits - in spite of a decade of evidence that
such credits do little or nothing to increase investments or jobs.
Only an employment tax credit for each newly created domestic US
job can rebalance the tax code. Clearly, employers and employees
should be taxed no higher than investments in machinery and
At present, our tax code overrewards the displacement of
employees by machines. Such tax arrangements helped lead to the
"part-timing" of the US work force, 30 percent of which are
"contingency workers." The resulting over-automation of the US
economy yielded little in overall productivity gains but inevitably
increased structural unemployment.
Both parties rightly plan to reduce the military budget and cut
waste. But according to a forthcoming survey on federal budget
options by the Americans Talk Issues Foundation, prepared for the
Congressional Institute for the Future, most Americans would cut
military spending by $47 billion - more than either party has
On the issue of waste, a good start would be elimination of some
of the $200 billion annually that Consumer Reports (July 1992) says
is wasted in our mismanaged health-care system. …