For US Prosperity: Tax and Spend
PRESIDENT Bush is trying to make "tax and spend" a political epithet as horrific as being "soft on communism" once was for an American politician. Rather than trying to run from the label, Gov. Bill Clinton should show that taxing and spending is precisely what separates us from our more successful industrial competitors. The superior educational systems, soaring productivity growth, broad and equitable health care, and ever-rising standards of living of most nations in the industrial world, except our o wn, prove that prosperity is not the result of an economic miracle but of how much a nation invests in its economy and how it raises this capital.
The Arkansas governor holds up Germany as a model in education, in the creation of an advanced manufacturing base, and for the achievement of what is now the world's highest standard of living - complete with mandatory six-week vacations and a 4 1/2-day work week - all managed with virtually no deficit. Perhaps he shouldn't shy away from telling America that for the Germans, the cost of affluence has been a total tax bill 30 percent higher than our own.
Of course, there are other ways for a nation to provide itself with investment capital. The Japanese have a relatively light tax burden, although higher than ours. In Japan, revenues for economic growth come from large private investment - at almost twice the rate of our own - made possible through low salaries and high savings.
The Italians, in a contrary manner, have financed their economic success through a kind of war-bond approach. They borrow hugely to finance high social-welfare costs, but they borrow almost exclusively from themselves - a particular sort of econo-centrism that results in a high savings rate and high investment. Interest payments flow back into their own economy rather than, as in our case, into someone else's.
Mr. Clinton's reminder that there is another world out there that is doing things better than we are doing is a first step in reorienting American thinking. The second, and perhaps harder step, is to explain to America that affluence has a cost. And, at the moment, we aren't paying for it.
OUR total tax bill as a percentage of national wealth is the lowest in the industrial world, except for Turkey. No other industrial nation saves less than we do. And the only nation with a lower rate of public investment than ours is Ireland. As a result, the United States has the highest rate of poverty in the industrial world; one of the most poorly educated work forces; and one of the slowest rates of productivity growth.
In short, the advanced economies of Asia and Europe put their money into education, industrial infrastructure, and social welfare, copying the successful example of the US from the 1930s through the 1960s that produced a reliable program of economic growth and the world's largest middle class among the major industrial nations. Indeed, without the prevalence of two wage earners in a house, the American standard of living would be the lowest among the major economic powers.
Clinton's prescription for economic growth and for national renewal follows the example of what has worked everywhere in the industrial world. We must avoid heavy outflows of interest payments and invest broadly in productivity enhancing infrastructure. In other words, tax and spend. An additional infrastructure investment of $100 billion a year for 10 years would bring us about even with present Japan investment levels.
The Republicans can be counted on to go all out with their new red-scare theme. But Clinton has two unique selling propositions with which to convince the nation it has to shell out: pride and pocketbook. Tell Americans about the accomplishments of other nations, about living standards far higher than our own, about less worry and better futures. And tell them that if we can get revenues and investment up - way up - the pain will be followed by soaring earning power and a new age of American affluence.