On Thursday, the Joint Economic Committee of Congress released its 1999
report on the economy, together with the Democrats' minority report
(jec.senate.gov). The contrast between the two is striking.
The Republican chairman and vice-chairman of the JEC, Florida senator
Connie Mack and New Jersey representative Jim Saxton, have produced a
thoughtful supply-side analysis. American economic performance is tracked
over time and compared to other countries' performance so that lessons can
be drawn. Those lessons include that government spending should be kept
within limits, that monetary policy should aim for price stability, and
that governments should give employers wide latitude in deciding whom to
hire, when to fire, and what to pay. The report also emphasizes what many
popular accounts do not: that part of the explanation for the sluggish
economic performance of twenty years ago and the strong performance of
today is that the proportion of people in their most productive years
(generally from around 35 to 59) was falling then and is rising now-as it
will through the next decade.
The Republican report goes into some more topical issues as well. It
points out that the surplus is large enough to accommodate tax cuts and
debt reduction; indeed, the tax-cutting Republican budget paid off a
little more debt than Clinton's. It also argues that "[i]f anything, the
tax cut proposed by Congress was too small. . . . After the tax cut was
fully phased in, tax revenues would still have taken 18.8 percent of
GDP"-a level that is still higher than it has been in 40 of the last 50
years. It argues persuasively that the Congressional Budget Office
underestimates revenues, and thus future surpluses, by around $1.3
trillion over the next ten years.
The Democratic report was issued by California leftist Pete Stark, the
congressman whose contribution to the impeachment debate was to suggest
that he would vote to topple Clinton if the president agreed to privatize
Social Security. Stark's report simply asserts, without so much as a
footnote, that Clinton's tax increase was a major contributor to today's
low interest rates and rapid growth. But in general, it says very little
about the conditions for continued growth.
Where the Republicans discuss international financial markets and how U.S.
policy can discourage currency crises, the Democrats view the world
economy entirely in terms of the trade deficit and its impact on U.S.
manufacturing jobs. Ok, there's one vague paragraph on how it would be
nice to promote growth in other countries. Compare that to the 8 pages the
25-page report lavishes on the current Democratic agenda of raising the
minimum wage and covering prescription drugs under Medicare. The world
doesn't matter; only Democratic constituencies do.
