- The Washington Times - Sunday, January 9, 2000

According to the latest pre-budget trial balloons floating above Washington, President Clinton intends to resurrect his ill-considered Universal Savings Accounts (USA) idea, a 15-year, $500 billion income-redistribution scheme he first proposed during last year’s State of the Union address. True to form, Mr. Clinton will characterize this government-directed “savings” program as a “tax cut,” which it clearly is not.

It is, however, further evidence as if any were needed that Mr. Clinton intends to allocate a huge portion of the next decade’s non-Social Security surpluses to paternalistic spending programs. Moreover, given that Vice President Al Gore heartily endorses USAs, the forthcoming proposal when added to his spending commitments for Medicare, other health insurance programs and education confirms that his presidential campaign will promise the biggest federal spending splurge since Lyndon Johnson envisioned the Great Society and the War on Poverty. It makes an utter mockery of Mr. Clinton’s insistence in his 1995 State of the Union speech that “the era of big government is over.”

The White House revealed last week that the president will use the upcoming State of the Union message to outline what he considers to be a 10-year package of “tax cuts” exceeding $300 billion. The 10-year cost of USAs, according to the budget the president submitted a year ago, was $272 billion. Thus, the so-called “tax cut” attributed to USAs could represent more than 80 percent of this year’s “tax cut” package. Apart from the fact that a 10-year tax-reduction program approximating $300 billion is woefully inadequate when non-Social Security surpluses are projected to be $1 trillion over the next decade, the fraudulent characterization of USAs as tax cuts means that the White House will be proposing virtually no real tax relief at all.

As outlined by the White House last April, under the Universal Savings Accounts program a family of four with an income of $40,000 would receive $600 in refundable tax credits. But the family would not be able to spend its “tax cut.” Instead, the government would require the family to invest those funds in a 401(k)-style retirement account, from which the holder could withdraw no money until the age of 65. For lower- and moderate-income families earning $40,000 and below, a husband and wife could voluntarily contribute up to $350 each, which the the government would match dollar for dollar. For families earning between $40,000 and $80,000, the government’s matching contributions would be smaller. These “matching contributions” a classic transfer payment are considered “tax cuts” as well.

Interestingly, Mr. Clinton never referred to USAs as a tax-cut plan when he introduced the idea last January. Nor did his subsequent budget include the plan among its proposed tax cuts. Indeed, the tax increases proposed in Mr. Clinton’s budget last year so overwhelmed the minuscule tax cuts the budget offered that it was widely and correctly reported that his 2000-2004 budget plan raised net taxes by nearly $50 billion. Only after tax-cut plans began emerging from the Republican Congress did the White House recast USAs as tax reduction. As Grover Norquist, president of Americans for Tax Reform, noted when the White House conveniently changed its terminology, “If Bill Clinton and the bureaucrats in Washington decide how to spend my money, then it’s spending. If I decide, it’s a tax cut.” It really isn’t very complicated. Even a Rhodes scholar should be able to figure it out, unless, of course, his real intention is to camouflage a massive new spending program as a “tax cut.”

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