Economic Policy Chad StigallEcon 10011/26/96 The new economic policy of the united states should include cutting taxes, reducing governmental waste, and balance the budget by having a smaller more efficient federal government. It should include equal opportunity for financial security but not through a government sponsored redistribution of wealth program. Cutting taxes across the board including income tax rates, capital gains and estate taxes among others should provide a growth spurt for the economy. Allowing people and businesses to keep more of their hard earned money would enable them to spend more money. People would be able to buy more cars, refrigerators, homes etc. The businesses would be able to build new factories with better more efficient high tech equipment.
These new factories and expanded businesses would employee more highly paid workers which would expand the tax base and allow us to be more competitive in the world marketplace. Reducing the taxes would also motivate people to work harder and save more. The way things are now people can not seem to get ahead no matter how hard they work. The harder they work the more the government takes while others who choose not to work hard or have not developed the skills to earn a decent wage reap the same and in many cases more benefits. For example student loans and grants for college board and tuition fees are largely unavailable to lower middle class families let alone middle and upper middle class people. Reducing taxes on businesses would also allow them to invert more on new product development and research which in many instances the federal government now subsidizes which requires management.
This government management bureaucracy cost tax payers money and is unnecessary because free market demands and the extra money they would save from tax cuts would motivate businesses to fund these programs themselves. This is just an example of what a smaller more efficient federal government. 'Citizens in the united states today pay 38. 2 percent of there income in taxes every year' (RNC Talking Points). This is way to much money for Americans to be paying. 'Cutting everyone's taxes by 15 percent and giving them a 500 dollar per child tax credit would cut a typical families tax bill in half, allowing them to keep an average of $1, 600 more of its hard-earned money' (RNC Talking Points).
The question is often asked as it was in the recent presidential election, how can we balance the budget and have significant tax cuts? There are several ways in which the government can cut taxes while maintaining worthwhile government subsidized programs, which will be discussed in this paper. To have funded tax cuts the government will have to cut spending by eliminating waste and by reforming while preserving needed entitlement programs such as Welfare, Social Security and Medicare though slowing the rate of growth in spending on them. As quoted in a Business Week editorial 'Cutting the growth in Medicare spending by $150 billion would help open the way for a truly balanced budget, lower interest rates and higher economic growth' (A Vote for a Sensible Center 194). To eliminate waste the government will have to cut programs that are no longer needed and programs that overlap each other. 'The federal government today has 163 separate job training programs, 26 food programs and 180 educational programs. The government needs to eliminate some, consolidate some and change others' (The Balance Sheet).
The government can also cut waste by cutting the amount of money that some of the governmental agencies receive for example the 'Republicans want to cut funding for the Commerce Department and the department of Urban Development budget by $715 million, Foreign Aid by 11. 5 percent, Defense budget by $6 billion and the congresses budget by $205 million' (The Balance Sheet). They can also reduce waste by spending money more wisely which can be accomplished by reforming some of the government agencies such as welfare, Social Security and Head Start. One proposal in particular seems fair and powerful 'New York senator Daniel Patrick Moynihan has been pushing for several years- a recalculation of the consumer price index so that it no longer triggers a higher-than-necessary cost of living adjustment in Social Security checks and other entitlement. That fix along with companion reduction in other programs tied to the consumer price index would save $1 trillion over the next twelve years' (A Very Good Place to Start 70). By reducing waste the government will be able to increase funding for programs that are needed, and put our hard earned tax dollars to good use.
There are many programs that need to be increased, the first is Social Security because our senior citizens need money to live on when they retire. Second is Medicare because its important to the health care of our seniors. Third, Student Loans because young people need higher education to get good jobs and compete with the rest of the world. Fourth is Law enforcement, law enforcement is an essential part of modern society. Fifth, Medical research And Health to make life better and find cures to deadly diseases. Sixth the Job Training because it helps to get people job which reduces the number of people on welfare.
Next, Food and Nutrition will help women, infant and children program (WIC), and the school lunch program. Last the National Parks we need to save the wonders of our beautiful country. The Republican national committee says 'the government needs to pass a balance the budget amendment to the constitution ensuring that the federal budget stays balanced and that Washington no longer continue to pile more and more debt on our children and grandchildren, mortgaging their future' (RNC Talking Points 1). At one time our country had a very small debt and 'no other currency on earth was as 'Sound As The Dollar'' (The National Debt 1). Now the national debt is five trillion dollars and climbing and the dollar is not nearly as strong. To keep inflation and interest rates from rising the government needs to balance the budget; 'As seen during the Carter presidency when inflation skyrocketed and interest rates hovered near 20%' (The National Debt 2).
If the inflation increases and interest rates rises it will slow the economy down because no one will be able to afford to buy anything or barrow money. Cutting taxes across the board will not just give people more money but will benefit the economy. By cutting taxes citizens as well as business will be able to keep more of their money they worked so hard to get. By cutting taxes this will also allow people to buy things that they can not afford now because taxes are so high.
The business will not only have more money from tax cuts but they will have more money from citizens buying more highly priced items. With this money the business will be able to invest in building new factories and new products, which will in turn make more high paying jobs for the for the hardworking American people. By cutting governmental waste they will be able to spend more on the entitlement programs that are truly needed. Cutting waste will also ease the task of Balancing the budget which will ensure that the debt does not continue to grow at an unsustainable rate. Balancing the budget will help ensure that inflation and interest rates remain at an affordable rate. Works Cited Kramer, Micheal.
'A Very Good Place to Start.' Time 18 Nov. 1996: 70. 'Review and Outlook Dole and Taxes.' The Wall Street Journal 29 July 1996: A 12 Sepp, Peter J. 'Are Republicans Serious About Cutting Fat?' New York Times 30 Aug. 1995: A 17 'Dole Hopes Tax-Cut Move Will Energize His Campaign, but Which taxes to Cut?' The Wall Street Journal 15 may 1996: A 16 'A Vote for a Sensible Center.' Business Week 18 Nov.
1996: 194 'The National Debt. It's Eating Us Alive!' Internet web 'The Balance Sheet -- August 11, 1995.' Internet web 'RNC Talking Points Cutting Taxes and Balancing the Budget Bill Clinton's Dirty Little Secret: A $64 Billion Tax Increase' Internet web.