The country has "moved past the sterile debate" of government
 
as the enemy versus government as the solution, says Clinton,
 
to a "third way" that it has found -- an ominous phraseology

in itself, but one which he has just described as that of

governmental largess and entitlement. Here, the hypothesis of

a higher hypothesis has become the former hypothesis.

Actually, it would be more appropriate to describe the
 
process in terms of a different dialectic.



We have, in Clinton's words, "pursued a new strategy for prosperity: fiscal discipline to
cut interest rates and spur growth." But this has not been Clinton's strategy. Rather, it is
one he has fought every step of the way. It has led to the closure of the deficit, which he
turned to next, and to the relative level of prosperity, but neither of those have resulted
from his initiatives. Indeed, had we followed his guidance, we would have the larger
deficits today he wants us to give him credit for having eliminated. The reduction from the
$398 billion deficit projected when he became President to the expected mere $10 billion
deficit for 1998 has not been his doing. The original projection was actually his
administration's figure, and considerably above earlier estimates. It was based only on his
circle's plans for government spending given the scope of policy initiatives they proposed
with great anticipation, which happily did not find fruition. It was based on their
anticipations of revenue growth, which were considerably diminished out of the tax
increase he pushed through by one vote. 

He went on to specifically reference the 1993 'budget deal' vision as the source of all of
this.  Instead, the higher revenues resulted from the greater economic activity which came
out of the falling deficit, basically due to the rising GOP strength in the Congress since he
took office. Rather than increasing tax revenue collections from the wealthier classes his
tax rate hikes foresaw, the revenue collected from the upper income levels actually
diminished at higher marginal tax rates. The greater revenue came out of the middle
classes, who were able to pay them on the increased level of economic activity. In fact,
real income has remained static since he took office. The result looks the same only to the
most undiscerning eye. Is it possible that this fellow really believes the things he is saying?

But he will submit the first balanced budget in thirty years, he claims, and it will continue
well into the future if we maintain the self-discipline. That he goes on to propose tens of
billions of dollars of new programs and spending somehow flies in the face of these
remarks. If they were put into place, could the budget remain balanced? Hardly. But, he
continued, "[W]e must not go back to unwise spending, or untargeted tax cuts, that risk
reopening the deficit." 

Understanding this requires a crash course in Clinton-speak, which, all of us, of course,
have had plenty of. What we have done is increased "[I]nvestments in education and skills,
in science and technology and transportation . . . " That 'investment' means government
spending by and large. To Clinton, higher taxes are an 'investment.' And what he means by
'untargeted tax cuts' are those which give people and the markets they operate in the sway
over economic choices and decisions. He prefers, and will only accept, those kind of tax
cuts in which government dictates those decisions. These, he insists, are what he won
enactment of last year, and these "targeted tax cuts, so that typical middle class families
will now have the lowest tax rates in 20 years." To the extent that is arguable will reside in
an effort to pull more people into govenmental dependency, but a dependency resting in
continuation of such governmental largess (Clinton will propose even more such targeted
tax 'cuts' and new investments). But, they are very elusive with real income not increasing,
and they evaporate as soon as the paycheck is cashed and we begin to pay our bills. There
is still the matter of the 1993 Clinton budget  projection of 83% average tax rates for
Americans fifty years into the future. The average was about 20% in the years right after
the Second World War, and it stands at close to 40% today at century's end.

He does recognize that a closure of the deficit will fuel a surplus in the short term, but he
has plans for that. It must be dedicated to saving social security. He would guararntee it
for all Americans. Perhaps he is refering to a refunding of the looted social security trust
fund, and he wants to invoke a dialogue which will produce a formula for that solution
over the next year. The landmark he wants to achieve is already clear. Social Security
taxes will have to be drastically increased, perhaps doubled, and part of the revenue
enhancement will come out of eliminating the cap on the income level the tax is applied to.

Clinton's now seemingly incessant drone is moving at a rapid pace. He wants to help those
poor families struggling to get along by again increasing the minimum wage. But there are
scarcely a handful of such 'families.' Nearly all minimum wage earners are people who are
new to the workforce. They have few job skills, and nearly all of them are either part time
workers or are in entry level positions, or both. He just simply fails to understand that
government cannot raise wages by fiat. At best, an increased minimum wage will simply
generate a modicum of inflation which will leave real wage levels of these workers
unchanged. To the extent that it functions as a 'base wage level' for higher earners, the
process will only be more pervasive. It is not possible to defeat market forces in this way.
But it will also reduce the number of entry level positions in the process, depriving those
who need entry level positions from obtaining them. It may even force some businesses
which operate on very thin profit margins into the red and out of business, depriving even
more of opportunity. Without normal profit expectation, business activity and real private
sector investment is diminished. That will, however, in Clinton-speak, demand a greater
role for government and public sector 'investment,' but further extending dependency. 

The only way that real wage levels can increase is through an increase in the value of
labor. That can be achieved through technological innovation which enhances labor power
and productivity as well as by education, which Clinton set his sites on in the next segment
of his remarks.


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