All About Debts

The Democratic Vision

Date 9/21/2000 12:00 AM | Topic: Opinion

Over the past seven years the United States has experienced unprecedented economic growth. The current administration's economic plan, which passed with Al Gore's deciding vote in 1993, has created more than 22 million new jobs, the lowest unemployment rate in 30 years and the highest homeownership rate ever. It has spawned more than 2 million new small businesses, cut welfare roles in half and seen the poverty rate fall to a 20 year low.

But whether we will continue to enjoy this boom or end up in a bust may depend on the next President and his policy decisions regulating what has been dubbed by some as the New Economy.

On September 5 Vice President Al Gore and Senator Joe Lieberman announced their comprehensive economic package entitled 'Prosperity for America's Families.' The 191-page document lays out the candidates' goals and details the steps that must be taken to meet them.

The key to the Gore/Lieberman plan is to maintain fiscal discipline in order to keep interest rates low and investment strong. The incoming President will face a unique situation when he enters into office. The budget for the government has been balanced, no longer running a deficit. In fact, there are projections of a large surplus. Politicians are asking, what are we going to do with this money?

The Gore/Lieberman plan will devote much of the surplus money into shoring up and modernizing Social Security, supporting new Retirement Savings Plus accounts which allow workers to invest some of their funds for retirement, strengthening Medicare, and paying down the national debt. For now, I will limit my discussion to paying down the national debt because the issues of Social Security and Medicare will be addressed in a future article.

Paying down our national debt, approximately $3.4 trillion dollars, would accomplish three things: First, we can divert money used for paying interest on the debt to help make Social Security and Medicare solvent. Second, it will help keep interest rates low for things like mortgages, student loans and credit cards. Third, it will increase national savings which in turn will promote business investment and the continued growth of the economy.

Other politicians feel that the surplus money should be returned to the people as an across-the-board tax cut. This may sound like a great idea at first, but a large tax cuts could have unfortunate effects on economic growth. As Alan Greenspan, Chairman of the Federal Reserve, pointed out during the tax cut debates in the Congress two years ago, the injection of such a large amount of money into the economy could cause inflation, ultimately overheating the economy.

The Gore/Lieberman plan, instead, recommends smaller tax cuts aimed at middle and lower class working families. In addition, the plan calls for the elimination of the "marriage penalty" and the expansion of Earned Income Tax credits to ease the tax burden on families and deductions for those paying college tuition.

Besides having a clear vision for the future economy, Gore has had an active role in shaping the current economy as Vice President. This experience gives Gore the advantage and additional credibility to the Gore/Lieberman plan. Gore is more familiar with the intimate details of the New Economy and therefore, a better idea of how his policies will affect economic growth.

The economy is an omnipresent issue in American politics. The combination of experience with progressive economic policies suggests that the Gore/Lieberman plan will indeed bring continued prosperity to our nation.

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Ryan Brown
Guest Columnist

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