Former Clinton economics guru, Robert Rubin, said on Face the Nation (Jan 06,02) that the drop in the estimated federal budget surpluses from five to two trillion dollars is the result of the tax reduction passed early in President Bush's term.  While describing this, Rubin several times referred to the recent boom as beginning in 1993 and ending with the last election.

Why did Rubin pick the year 1993?

Well, that's an easy one.  It was just after Bush the First left office and just before Republicans in the Gingrich Revolution took control of Congress.  It was the only window Rubin had which allowed him to claim that Republicans had nothing to do with the boom..  That makes Rubin's statements on this program purely political propaganda.

If you look at the numbers, you will find some interesting opposition to Mr. Rubin's contentions.  The first thing you find is that economic growth resulted from the large Reagan tax cuts of the 80's.  Carters brutal inflation disappeared and revenues to the U.S. Treasury went up. Regan spent a bunch on rebuilding the military, which is a constitutional responsibility, and one, perhaps, that after 911, a majority of Americans finally accept as rather important.  It was only heroic social welfare spending by the liberals that kept America safely in the grip of massive deficits during the Reagan era.  

The Reagan boom hit a glitch when Bush the Elder broke his promise and allowed the Democrat-controlled Congress to raise taxes.  It cost him the presidency because he lost his base, and it dampened the economy enough to give Bill Clinton the wedge he needed to pull off a non-majority vote victory.  (Clinton won both terms with a plurality, not a majority.)

You see, raising taxes slows an economy, and reduces income to the treasury.  Lowering taxes inspires economic growth and increases income to the treasury.  Aha! you say.  When Clinton took office, one of his earliest moves was to team with the Democrat-controlled Congress to produce one of the (if not the actual) largest tax increases in American history.  What followed that?  A boom!   That proves higher taxes improve the economy!

Wrong, Kitzhaber-breath. It proves that even Bill Clinton and the Democrats couldn't destroy the economic benefits delivered to America by Newt Gingrich.  Gasping, barely holding back laughter, you say, "That is the biggest whopper I have ever heard in my life!"  

Do not feel bad about thinking like that.  As a compassionate conservative, I can tell you that your inability to understand anything that is going on around you is not your fault.  You were educated in an American public school.  In time, this will be recognized as a crime against humanity, and its perpetrators will be tried in the Hague and given life sentences in Spandau Prison.

Here's what you were never taught.  The reason why your credit cards get maxed out is that you spend more than you earn.  The reason why your government gets maxed out is that you vote for liberal Democrats.

Any economy, yours or your nation's, is first about earning, and last about spending.

You see, if you dig around a bit, you discover how the economy began to shoot up not in 1993, as Rubin claims, but in 1994.   Now, why would that be the case?  Clinton's tax hike needed some time to improve things?  Nope.  Think back.  What major political event took place in 1994?

Newt Gingrich took the House and the Senate.

For the first time in 60 years, both houses of Congress were in the hands of people who hate big government.  People who fought the ever-increasing spending of Democrats, particularly on social welfare pork.  For the first time in 60 years, the rate of spending increase declined.  For the first time in 60 years, the bloated programs inspired by FDR, accellerated by LBJ and maintained by Jimmy Carter and six decades of congressional Democrats, came to a screeching tiny slight lowering of their rate of expansion..  The budgets still increased, but the increases were reduced.  In the case of welfare, dramatically reduced.  Clinton vetoed that effort twice, then, when Gingrich got the votes to overcome his veto, signed it and took credit for the idea.  It was perhaps the biggest lie told by the biggest liar in the history of the White House.

Wall Street saw what happened.  The growth of government was being restrained.  And, as luck would have it a new industry left its infancy and began to flower in America -- the personal computer became almost as much a necessity in the American home as a refrigerator. 

A halter on formerly unlimited deficit spending by Democrats and a powerful new product that, like the steam engine, changed the world. That was the moment the "Clinton" economic boom began.  In 1994, not 1993, and Robert Rubin knows it -- which is why his statements on Face the Nation today were outright political lies.

Some basic economics.

Government creates nothing but government.   Government jobs are an expense, not a benefit for the economy. Even though called a "stimulus" by liberals, they are like spending ten bucks to make five. Keep that up for long and you'll empty the till.  The doors will have to close.

The Soviet Union collapsed because all the jobs there were government jobs.  The people of North Korea are starving because all the jobs there are government jobs.  You have to bring your own lightbulb if you wish to read at night in a Cuban hospital because all the jobs in Cuba are government jobs. The Chinese, even though dedicated communist tyrants, are not completly stupid.  The economic failure of socialism in every case did not escape their notice.  To keep from going under like the rest of their comrades, they invited Wall Street to open offices in Beijing, and let commune workers grow succotash in a small plot of their own after work -- and sell it in the town marketplace.

Government spending does not "stimulate" the economy.  It "debilitates" the economy.  The only way a government can stimulate an economy is to get off the backs of the wealthy.  You never got a job from a pauper, and you never will.

If you work for Intel or Dairy Queen, you work in the private sector.  The non-government sector.  These businesses borrow money to get the buildings and equipment needed to make computer chips and hamburgers.  The places they borrow this money from are private economy places.  The vast majority of the funding they get doesn't come out of your pocket.  Except in the case of the military and similar efforts, like dams, roads and scientific research, none of it should come from government.  Japan is slowly learning that lesson, now.  One day soon, you will hear of the greatest national default in the history of the Pacific Rim.  It will make Enron look like a mosquito bite.

Any time a government "invests" in the private economy, the money comes out of your pocket.  Government gets all of its money from your pocket.  Even corporate taxes come out of your pocket.  .Every dime of corporate taxes General Electric paid last year came out of the money they made from their products.  When you bought a G.E. toaster, you paid G.E.'s taxes.  The only time you don't pay the taxes of every corporation in America is when they find a way to cheat the government and not pay their corporate taxes.

When the government gets all this money, it distributes it.  Gives it to somebody.  After taking its cut from your tax dollar (70% in the case of dollars headed for welfare programs), what's left is handed out to two kinds of people.  The first kind is people we need.  They make guns and dams and roads and bombers and military uniforms.  The second kind is people we don't need.  They are fifteen-year-old mothers who pump out kids like Ford pumped out Model-T's, and sit around watching Opra while doing drugs.  They are twenty-year old cripples who have fried their brains on cocaine, robbed every decent citizen within miles and now cost fifty grand a year to feed and house in the state pen.  

And, there is a subclass of this latter group.  Those who suck on the government nipple.  They are people who build multi-billion dollar light rail systems that even after they are finished cost you eight bucks per passenger, lack the capacity to do anything about traffic congestion.  This, not reductions in normal business taxes, is the actual corporate welfare.

Look at Portland, Oregon's light rail system, known as Max.  It should be called "Min." The people who live in the city drive cars or take the bus because except for the airport, Max doesn't go anywhere they need to go.  And, the people in the suburbs?  They drive cars becaue Max doesn't go anywhere they need to go, either.  Max light rail is the perfect example of what government often does with your money.  It's a neat little Lionel train toy that goes round and round the Christmas tree, accomplishing exactly nothing.

The poor benefit from tax cuts for the rich.

So, now you know that except for things like airports, roads, dams and armies, the government is not the most efficient way to make or do anything.  Yet, liberal politicians constantly speak of government spending as "investments."  Why do they do this?  Because the word "investment" comes from the private sector, where people have to bust their butts to make that investment pay off, or lose their jobs.  Whether a government expenditure works or not, government employees have secure jobs.  There is no incentive for a government worker to give a damn whether the money they spend is spent efficiently, or not.  Either way, their job is safe.  But calling what they do an "investment" sounds a lot better than calling it what it is - an expense.

Now, stop for a moment and ask yourself what rich people do with their money.  They do two things.  They buy something with it, or they invest it in hope that it will earn them even more money.  Make them even richer.

There isn't a single rich citizen in America who sits on top of a great pile of cash, gold and jewells and just looks at it.. 

When rich people buy something, the people who make that something get paid for making it.  Millionaires don't make luxury boats or homes.  Shipwrights and carpenters do.  Millionaires don't make automobiles.  Autoworkers do.  Millionaires don't make cell phones.  Electronic workers do.  Every time a rich man buys something, dozens of blue collar types get a paycheck.

What rich people don't spend, they invest.  All the good businesses, great and small, in America are founded and developed via investment funding.  Investment funding is the reason why the welders on a railcar production line have a place to build railcars, a giant magnet to move metal beams to where they can  be welded, and welding equipment to do the welding.

Every dime in the pocket of wealthy people, except the portion they donate to charities, either goes to buy something that provides jobs or goes to investments that fund businesses that provide jobs.  Poor people don't buy stocks.  Rich people buy stocks.  The more you tax rich people, the less money they have to buy stocks.  The less the rich buy stocks, the fewer companies there are.  The fewer companies there are, the fewer jobs for the non-rich there are.

You must get over your class hatred of the rich.  Every non-government job in America is there because of the money invested by the rich.  If you want more non-government jobs in America, reduce taxes on the rich.  If you want a dramatic increase in the number of non-government jobs in America, thus a reduction in the cost of government, thus a reduction in your own taxes, dramatically reduce taxes on the rich.

The result will be more people working in private economy jobs.  Private economy jobs don't cost you a dime in taxes.  Government jobs are entirely supported by taxes.  But, that's just part of the benefit.  More private economy jobs means fewer people on welfare -- and this results in something magic.  Fewer people on welfare, if they're working for the private economy, means an increase in revenues to the treasury.  Folks who used to be a drain on the economy start paying taxes for the first time in years.  

The net result can be boiled down to this.  Every hundred bucks coming in from a private economy job taken by a former welfare recipient means a cut of a hundred dollars from government spending. (Or one hell of a scramble by bureaucrats to find a way to keep spending what they've been spending with fewer people to spend it on.)  And instead of costing you tax dollars, the former welfare recipient is contributing tax dollars.

It's as simple as that.

Anything the government does costs you money.  Anything the rich do generates jobs that don't cost you a dime. And, when those jobs that don't cost you a dime are filled by folks who used to get government support checks, the rich have just saved you money, too.  

Government is bad.  Rich people are good.  Liberal Democrats love government and hate rich people.  Bad liberal Democrats. Conservative Republicans hate government and love rich people.  Good Conservative Republicans.

If that's too difficult for you to deal with, just remember this.  Robert Rubin is full of crap.  Any government that ends up with a budget surplus has overcharged the taxpayers and should be required to return every extra dime immediately..  Why you aren't pissed about being overcharged trillions of dollars by your government, when a fifty cent hike in one of those bank machines drives you into a rage, is a complete mystery to me.  (LL)
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(C) 2002 Oregon Magazine