Tax Cut’s Impact on Federal Budget
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* Martin and Kathleen Feldstein take the position that paying for Bob Dole’s tax cut would require reduced federal spending equal to only 0.6% of GDP (Commentary, Sept. 11). They state that cutting the budget to that extent “is not an insignificant task, but neither is it impossible.”
In abstract terms, there is nothing wrong with this argument. But what seems like a small amount--0.6%--looms larger once put in perspective. In fiscal year 1995, the last complete fiscal year, 0.6% of GDP would have been about 3% of federal spending. If defense, Medicare, Social Security and interest on the debt were protected from cuts, 0.6% would have been about 8% of the remaining budget.
But how much of the remaining budget is truly likely to be chopped? Veterans’ benefits? Air traffic control? The FBI? Immigration control? The gathering of the very economic statistics on which the Feldsteins’ estimates are based? As more items are protected, the required cuts in the remainder become more draconian.
Of course, the same logic applies to budgetary claims made by spokespersons for the other presidential candidates. Either specify politically feasible cuts to go with budgetary proposals or talk about something else.
DANIEL J.B. MITCHELL
Professor, Anderson Graduate
School of Management, UCLA
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