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from NewsLink, Vol. 5, No. 4, Summer 2001
Stop the presses! That's what we said when we were about to go press with this issue and word came from the Manhattan Institute that Mayor Giuliani of New York City wanted to conduct a news conference that would show how tax cuts enacted under his administration had contributed to the expansion of the city's economy. The mayor had learned how, using the NYC-STAMP model we'd developed for the Manhattan Institute, he could show just how many new jobs those tax cuts had created. See BHI to NYC: Drop tax hikes. We hope that you'll agree that it was a story worth waiting for.
In other developments, BHI got directly into a budding health care debate in Maryland, with the publication of its report detailing how proposed universal health care would inflict job losses on the state economy. A group called Health Care for All has targeted Maryland as a state that is ripe for implementation of a process deemed likely, by some observers, to culminate in single-payer health care. BHI developed a Maryland-STAMP to support its report on Maryland health care as part of its strategic relationship with the Heritage Foundation.
An observation attributed to Bismarck has it that “if you like laws and sausages, you should never watch either being made.” This summer, BHI intern Georgia Pellegrini discovered that, if it's sausages you want to see being made, you won't have much luck around Fenway Park. Stories about Georgia and about her findings concerning the Red Sox' war against small vendors also appear in this issue.
Staying on track
Massachusetts legislators are agonizing over projected revenue shortfalls, supposedly made all the worse by last year's state tax cut. They join the same chorus that is trying to tie the national economic slowdown to the Bush tax cuts. Those of us who see tax reduction as a means of permanently expanding real private-sector output have to keep the debate on track. To do this, we have to keep stressing the economic fundamentals:
• Lower tax rates expand jobs and capital formation.
• The national slowdown began under the Clinton administration and was an inevitable consequence of the low private saving rates and trade deficits that characterized the Clinton economy.
• There is not now, nor was there ever, such a thing as a “social security surplus.” The money comes in. The money goes out. Sometimes the money that comes in exceeds the money that goes out. Sometimes it doesn't. What matters is (1) how much goes out, (2) how it is spent and (3) how we collect it. The rest is the kind of rhetoric that should be put into...well...a lock box.
• Any state deficit that might materialize as a result of the current slowdown will do no more economic harm than the repeated surpluses that the state has been running for years. These surpluses, themselves the result of poor forecasting and poor budgeting, were made possible by overly high tax rates that cost the state thousands of private sector jobs – the real cost of fiscal mismanagement in Massachusetts.
A fond farewell
We were sorry to say good-bye last month to Ellen Foley, BHI Director of Communications. Ellen came to us ten years ago from the Suffolk University Development Office, where she had directed a large variety of events and publications, including the Suffolk University Magazine. Ellen directed the Allison International lecture series, the BHI conferences on banking, the BHI Washington, DC conference on welfare reform, and, most notably, our dinner honoring the life of founder Ray Shamie. Ellen oversaw the writing of our biography of Ray Shamie and conceived, named and produced BHI NewsLink. We will miss her creativity, her attention to detail and, most of all, her stewardship.
NewsLink is the quarterly newsletter of the Beacon Hill Institute for Public Policy Research at Suffolk University. © 1996-2001. All rights reserved.
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