Date: 1981-10-01
Speaker: ROBERT C. BYRD (democrat)
Chamber: S

Mr. President. we often have New Years Eve celebrations. Today Is the beginning of the new fiscal year and yesterday there was a kind of New Years Eve celebration. So. I suppose. that yesterdays having witnessed the New Years Eve party. today would be an appropriate day to think In terms of the "morning after." The trouble with New Years Eve celebrations is that we all have to wake up the next day to face reality. Arthur Schlesinger. Jr.. recently wrote: The supplyside fantasy Is voodoo economics.... The witch doctors have had their day. Reality is awaiting. .Much Is said about the Presidents pro. gram not having been In effect and about todays being the day In which the program will. at last. go Into effect. The President. from time to time. has said: WhY. of course. my program is not working. Those who say my program is not working. of course It isnt. It hasnt begun yet it wont begin until October 1. Well. this Is October 1. but the program began. in many respects. long ago. For example. the business side of the tax cut was made retroactive to January 1. So that was New Years Day for the business side of the tax cut. The tight money Policy which Mr. Reagan advocated all during the campaign last year has been in *effect all year. and prior thereto. as a matter of fact. The money growth policy of the Federal Reserve has been as restrictive this year as at any time In history. Many of the rescissions went into effect several weeks ago. The budget cuts alreadv have been felt to some degree. although not as much as they will be. and the regulatory relief compoient of the Presidents economic program has been in effect quite some time. the President already claiming in his most recent tele. vised speech to have reduced Government regulations by 30 percent. So in reality. most of the Presidents economic program has been in effect before today. As I say. money has bennr tight since January. budgets have already been cut. and the business tax cuts were retroactive to January 1. The Presidents program is undeniably complete now. so it Is time to cast aside future promises and accept the present responsibilities. As October 1 approached. the admilnistrations brave words and rosy predictions began to wilt. Nearly a year ago. candidate Reagan told a nationwide audience that he had "submitted an economic plan * 0 that can provide -for a balanced budget In 1983 if not earlier. and * * we can afford the tax cuts I have proposed." Four months later. on February 3. 1981. the President backed off somewhat. telling reporters "one of the things I have not retreated from is the 1983 target of a balanced budget." Fifteen days later. on February 18. In presenting his economic recovery program. he declared thatBy fiscal 1984. under the policy recommendations presented In this document. the Federal budget should be in balance. Now. with the exception of a few Preprogramed computers at the OMB. there is no indication that a balanced budget Is In sight. and even conservative economists. many of them. admit that the 1984 deficit could run between $75 and $100 billion. The supplyside miracle predicted by the administration has also been exposed as something like a high school card trick. Treasury Secretary Donald Regan said in February: The negative reaction on Wall Street.. Is betting on thie ability of this admInistration to get this package through the Congress. .... They like the package. but they are suggesting that we may not be able to get this through the Congress. Not to be outdone by his boss. Treasury Under Secretary Norman Ture said: I think you will see an upturn In the very. very near future. following the adoption of the President. program. Then Secretary Regan upped the ante slightly by declaring. In April thatA full three year progracm announced and enacted Into law ... will produce immediate and beneficial responses by workers. savers and investors. These Predictions trailed off as passage of the administrations tax and budget Packages became more likely. And in August. as the markets responded to passage with tumbling bond and stock prices. and greater deficits loomed for the future. the President said that problems were caused "in part (by) not getting totally what we had asked for In the budget cuts. but also that the tax package finally came In with additional reductions." Well. the President asked for $35 billion in tax cuts and lhe got $35 billion !n tax outs. Ho asked for a 3year acrosstheboard tax cut and he got a 3year acrosstheboard tax cut. He first asked for 10 percent per year for 3 yearsKempRoth in its purest formand then he backed away from 10 percent the first year. It was obvious that 10 percent the first year would create too great a strain on the budget. so the administration backed away from the 10 percent the first year. So it was 5 percent the first year. 10 percent the second. and 10 percent the third. which was KempRoth still in its purest form. with the business component of the tax cut being made retroactive to January 1. Such excuses are less convincing when we remember that in late April. the President urged a Joint session of Congress to pass the Budget Act. saying: We embrace and fully support the (GrammLatta) substitute. I have inserted the words "GrammLatta." to Identify the substitute. It will achieve all the essential aims of controlling Government spendingListen to that. It will achieve all the essential aime of controlling Government spending. reducing the tax burden. building a national defense program second to none. and stimulating the economic growth and creating millions of new jobs. Already we are seeing what Is happening to the national defense program "second to none." It Is already being cut $2 billion this current fiscal yearfiscal Year 1982. a $2 billion defense cut. If it were cut to $3.8 billion. It would be down to the Carter budget. So I would Imagine that the Soviets. having been challenged to an arms race whierh they "cannot hope to win". as the President said. are probably puzzled by this type of arms race in which the administration promised a great defense buildup and now Is already talking about skeletonizing an army division and cutting back on many other needed areas of defense. But that can be a subject for another day. In July. the President said that the tax billIncludes just about everything to help the economy. We reduce the marriage penalty ... we Increase the exemption on the inheritance or estate tax . . . (we include) a shortterm but substantial assistance for the hardpressed thrift Industry as well as reductions in oltaxes ... Most of these specific items were "additional reductions" the President criticized a few weeks later. There should be no surprise about the failure of markets to turn around. or of investment to spurt forward as administration Predictions foretold. The onetwo combination of high Interest rates and slack demand make capital investment highly unattractive to businesses. when an 18percent return can be earned in money markets. As Arthur Schlesinger. Jr. correctly notes: It turns out now that while rich people naturally rejoiced in a program that reduced their Income and estate taxes. they never really believed It would produce all those miraculous side effets ... For a man who revere3 the free market. (President Reagan). is strangely resistant t0 the markets verdict on his economic plan. On this morning after the night before. Democrats call on the President to watch the markets verdict closely. Nearly a month ago after the tax aind budget bills were passed. President Reagan said: Theres been a slump. and they say. "Well. the slump is because the program isnt workIng." Well. it isnt. It deant start until Today is October 1. We all hope the Presidents program will work. and that the supplyside miracle he promised will occur. But we are afraid It will not. and Vhat the losers will be the millions of Americans who work for a living or depend upon social security for their livelihood. or the small business people who are facing bankruptf.y and confronting the sordid picture that bankruptcies are up 41 percent over what they were a year ago. These are the people President Reagan called the real "heroes" of America. and they deserve our best efforts to Improve the economy. I hope we will not forget them as the New Years glow fades. I ask unanimous consent to Insert In the RECORD an article by Arthur Schlesinger. Jr.. which appeared in the Wall Street Journal on Tuesday. September 2D.