79-09-A7
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Money[edit]
Transcript[edit]Is the Proposition 13 fever that swept the country last fall and had candidates promising spending cuts beginning to cool down? Or does it just need a reminder from all of us that another election year is coming up and we still have that fever? At the height of the fever, Senator Nunn of Georgia introduced an amendment-- which was duly passed--calling for a spending limit and tax reductions over the period 1980 to '82. But as spring fever lulled his economy-minded colleagues, they reverted to type. By the middle of May it was clear that the Senator's spending limit would be exceeded by $42 billion and taxes will go up $68 billion above his ceiling. Now this doesn't mean his fellow lawmakers will raise taxes by that amount. They won't have to. Government profits by inflation and as cost of living pay raises move workers into higher surtax brackets, the government will get that much undeserved income. Many years ago, Nicolai Lenin said a government can quietly and unobservably confiscate the wealth of its citizens through inflation. Well, to make it less unobserved, holders of U.S. government bonds lost $45 billion in the value of those bonds last year because of the nine percent inflation rate. Harvard Economist Martin Feldstein says our once powerful U.S. economy is slowing down because people are no longer saving money as they once did. It just doesn't pay to save as that loss on savings bonds indicates. When we save either through insurance or bank savings accounts that money is invested in business and industry to earn the dividends and interest we receive. Without such savings to invest our economy can't grow and provide jobs. Professor Feldstein suggests cutting the tax rates on savings and investment. But as the first item indicates, Congress is not in a tax cutting mood which indicates some in our Congress need to take a course in elementary economics. Two economists with Chicago's Harris bank, Robert Genetski and Young Chiu, have studied the economic growth rate of our 50 states. Those states that cut taxes had an above average economic growth. A number of states that sharply increased their taxes -- among them New York, Connecticut, Rhode Island, Vermont, New Jersey and Massachusetts -- suffered an economic decline. States that neither raised or lowered tax rates went along with lower than average economic growth. One last item on money. Citicorp, a giant New York based bank, recently put out a pictorial document on the history of inflation in the U.S. over the last 100 years. They did it by picturing stacks of pennies representing the purchasing power of the dollar at various times. They took the year 1900 as the base, with 100 pennies to the dollar and went backward and forward from there. For example, in 1894 the dollar was worth 96 pennies. In the war year of 1918 inflation had reduced it to about 55 and one half cents. Its highest point since then was in 1934 when there were 62 pennies in the stack. A dollar was worth 48 cents in 1942, 27 and one half cents in 1962 and only 12.8 cents in 1978. It has lost some of that so far in 1979. This is Ronald Reagan. Thanks for listening. |
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